Hansard, 2004-09-01

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 (2004) To (2004) Mr Zainul Abidin Rasheed 24 Jul 25 Jul 26 Aug 27 Aug BG George Yong-Boon Yeo 26 Jul 30 Jul 31 Jul 01 Aug Ms Irene Ng Phek Hoong 26 Jul 28 Jul 31 Aug 11 Sep Dr Tony Tan Keng Yam 26 Jul 28 Jul Mr Arthur Fong 27 Jul 31 Jul 01 Sep 01 Sep Mr Ong Kian Min 29 Jul 31 Jul 02 Aug 06 Aug Assoc. Prof. Koo Tsai Kee 30 Jul 31 Jul 08 Sep 12 Sep Dr Warren Lee 30 Jul 31 Jul 28 Aug 17 Sep 16 Oct 18 Oct Mr Wee Siew Kim 30 Jul 01 Aug 12 Sep 17 Sep 22 Sep 25 Sep 27 Sep 10 Oct Prof. S Jayakumar 31 Jul 05 Aug Encik Yatiman Yusof 02 Aug 05 Aug 31 Aug 11 Sep Dr Lee Boon Yang 03 Aug 06 Aug 07 Sep 13 Sep 18 Sep 20 Sep 27 Sep 03 Oct Column: 299Dr Michael Lim Chun Leng 04 Aug 06 Aug 03 Sep 06 Sep Mr Zainudin Nordin 04 Aug 07 Aug 12 Sep 17 Sep Mr Ng Ser Miang 06 Aug 30 Aug Mr S Iswaran 10 Aug 19 Aug 29 Aug 31 Aug Mr Leong Horn Kee 13 Aug 16 Aug RAdm Teo Chee Hean 13 Aug 17 Aug Mdm Cynthia Phua 14 Aug 14 Aug 11 Sep 17 Sep Mr David T E Lim 14 Aug 19 Aug 01 Sep 02 Sep 03 Sep 11 Sep Mdm Halimah Yacob 14 Aug 16 Aug 14 Sep 18 Sep Mrs Yu-Foo Yee Shoon 14 Aug 21 Aug 07 Sep 11 Sep Mr Chay Wai Chuen 16 Aug 19 Aug 01 Sep 04 Sep Mr Mah Bow Tan 16 Aug 20 Aug Dr Ong Chit Chung 16 Aug 18 Aug 23 Aug 24 Aug 06 Sep 10 Sep Mr Raymond Lim Siang Keat 16 Aug 19 Aug 30 Aug 06 Sep Mr Ang Mong Seng 18 Aug 21 Aug 12 Sep 17 Sep 22 Nov 26 Nov Mr Inderjit Singh 18 Aug 20 Aug 06 Sep 27 Sep 01 Oct 05 Oct Assoc. Prof. Dr Yaacob Ibrahim 18 Aug 21 Aug 26 Aug 01 Sep Mr Gan Kim Yong 19 Aug 20 Aug 27 Aug 27 Aug 02 Sep 05 Sep Mr Yeo Guat Kwang 21 Aug 23 Aug 29 Aug 01 Sep Mr Goh Chok Tong 23 Aug 25 Aug 08 Sep 11 Sep Mr Sin Boon Ann 26 Aug 28 Aug 05 Sep 11 Sep Mr Abdullah Tarmugi 28 Aug 28 Aug 12 Sep 17 Sep Column: 300Dr Ahmad Mohd Magad 30 Aug 10 Sep 21 Sep 24 Sep Mdm Ho Geok Choo 30 Aug 04 Sep Dr Jennifer Lee 30 Aug 19 Sep Dr Tan Cheng Bock 30 Aug 04 Sep Mr Davinder Singh 01 Sep 02 Sep Mr K Shanmugam 01 Sep 02 Sep Mr Tan Soo Khoon 01 Sep 02 Sep Mr Lim Hng Kiang 02 Sep 05 Sep Mr Steve Chia Kiah Hong 02 Sep 07 Sep 12 Sep 21 Sep Mr Tharman Shanmugaratnam 02 Sep 06 Sep Mr Heng Chee How 03 Sep 09 Sep 04 Oct 07 Oct Mr Loh Meng See 03 Sep 07 Sep Mr Seng Han Thong 04 Sep 09 Sep 14 Sep 17 Sep Dr Wang Kai Yuen 04 Sep 12 Sep Mr Lee Hsien Loong 08 Sep 09 Sep Mr Lee Kuan Yew 08 Sep 11 Sep 13 Sep 30 Sep 18 Oct 21 Oct Mr Lim Boon Heng 08 Sep 11 Sep Mr Chew Heng Ching 09 Sep 20 Sep Mr Hawazi Daipi 09 Sep 11 Sep Dr Ong Seh Hong 11 Sep 18 Sep 27 Sep 07 Oct Miss Penny Low 12 Sep 17 Sep Mr Lim Swee Say 14 Sep 17 Sep

Dr Michael Lim Chun Leng

Dr Ahmad Mohd Magad

ABDULLAH TARMUGI Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the date stated:

3rd August,2004 (1) The Inland Revenue Authority of Singapore (Amendment) Bill (2) The Statutes (Miscellaneous Amendments) Bill

ABDULLAH TARMUGI Speaker Parliament of Singapore

Mr Speaker, Sir, with the appointment of Mrs Lim Hwee Hua, the former Deputy Speaker, as the Minister of State, I now propose that Mr S Iswaran be elected as a Deputy Speaker of this Parliament.

Mr Iswaran was elected to Parliament in 1997. He has sat on several parliamentary committees, including the House Committee and the Standing Orders Committee. He is also a member of theSingapore-Asia Pacific Rim Regional Group and the Singapore-Southeast Asia Regional Group. He hasattended several conferences and isthe Commonwealth Parliamentary Association's Regional Representative for Southeast Asia. I believe he is well able to assist you in the performance of your duties.

MrSpeaker, Sir, I support the proposal.

There being no other proposals, I declareMr S Iswaran to have been duly elected as a Deputy Speaker of this Parliament. [Applause].

1. Mr Leong Horn Kee asked the Minister for Trade and Industry (a) what is the expected impact of the recent and potential further increases in oil prices on the various sectors of Singapore's economy; and (b) whether the revised GDP growth forecast of around 8% for this year will be affected.

2. Dr Amy Khor Lean Suan asked the Minister for Trade and Industry (a) what will be the impact of persistent high oil prices on our economic growth; (b) whether the scenario of persistent high oil prices has been taken into account in our latest growth forecast of 8% to 9% for the whole of 2004; and (c) what measures have been or can be taken to offset any negative impact of high oil prices on our economic growth.

Mr Speaker, Sir, may I have your permission to take Question Nos. 1 and 2 together because they are on the same topic?

Yes.

Mr Speaker, Sir, higher oil prices affect theSingapore economy in a number of ways. Most directly, it reduces demand for our oil and petrochemical exports as consumers either reduce their usage or turn to alternative products. Other non-oil domestic exports and re-exports can also be adversely affected indirectly if higher oil prices slow down the economic growth in our key trading partners.

Oil prices sustained at high levels also affect domestic demand. Consumer sentiments may be hurt and prices of non-oil consumer goods could increase as businesses pass on the higher cost of

energy. This is likely to lower private consumption growth in Singapore. Private investments, too, may become more sluggish if businesses believe that energy prices will stay persistently high, thus lowering the profitability of new ventures. The impact on investment may also be greater if interest rates rise with higher inflation expectations.

The impact of high oil prices would not be felt equally among the various sectors of the economy. The transport sector would bear a higher share of the price hike initially since fuel enters directly into its costs. The manufacturing sector could also experience greater upward cost pressures due to the higher energy intensity and the reliance on petrochemical products as primary inputs for some of the activities.

Nevertheless, much of the impact of an increase in oil prices is expected to be felt only with a time lag. Oil prices have only started rising sharply since April this year, and much of the impact of the recent increase is unlikely to be felt in the current year. The consumer price inflation in Singapore, for instance, remains low in recent months and most major economies have continued to maintain strong growth momentum.

Hence, recent studies by the Asian Development Bank and International Energy Agency expect only small reductions in Asian GDP growth from the increase in oil prices. For Singapore, the ADB study released in June 2004 estimates that GDP growth this year will be 0.4 percentage point lower due to the increase in oil prices.

The ADB projection is similar to estimates by the Ministry of Trade and Industry. In a scenario where oil prices stay at an average of US$45 per barrel from August to the end of the year, GDP growth for 2004 is projected to fall by

about 0.4 percentage point below the baseline case. If oil prices are assumed to rise to US$50 and remain at that level to the end of the year, MTI's projection is that GDP growth for the year could be 0.6 percentage point lower than in the baseline case. Most of the negative impact is expected to come from a decline in external demand for Singapore's exports.

While the downside risk to Singapore's GDP growth this year has risen recently, the impact of higher oil prices alone is unlikely to result in the full-year growth for 2004 falling below 8% at this point. Preliminary economic indicators for July also continue to indicate that the growth momentum has remained positive.

It is still too early to make an accurate assessment on how the economic outlook for 2005 will be affected, when the impact of higher oil prices will be felt. Much would depend on developments going forward, including the trend of crude oil prices. The MTI will closely monitor the situation and update its GDP growth projections, where necessary.

The price of oil has shown significant volatility since the 1970s and is likely to remain so for the foreseeable future. We can best mitigate the impact of higher oil prices by adapting our business practices and lifestyles to improve energy efficiency. For instance, we could turn to the increasing number of energy-saving alternatives when choosing electrical appliances and devices. We could also switch towards transport vehicles with greater fuel economy. These changes in consumption behaviour will only happen, however, if businesses and consumers receive the right price signals. Hence, we should not artificially suppress prices. Instead, we should allow prices to respond to higher energy cost so that demand for oil can be moderated. By doing so, we can continually limit our

dependency on oil and reduce our sensitivity to future shocks in oil prices.

Mr Speaker, Sir, I would like to thank the Minister for his assurance that we can still keep to about 8% GDP growth. But I have just been reading this article from Business Week on "Coping with sky-high oil prices" which predicts that oil prices may go up to US$100 per barrel. Of course, we do not wish for that scenario to happen but ---

Ask your question, Mr Leong.

May I ask the Minister that should oil prices go to such a high level of US$100 per barrel, as stated in the article, what would be the impact on our GDP growth this year and other impacts, like inflation, and on sectors that require oil as fuel, such as pump prices, electricity tariffs and even on transport costs like bus fares and MRT fares.

Mr Speaker, Sir, obviously, one can paint many different scenarios. Mr Leong Horn Kee referred to the article where they postulate a probability of oil reaching US$100 a barrel. But for those who look at the fundamental demand/supply conditions as well as the whole supply chain, they have come to the assessment that there is no shortage, and they estimate that the price reflecting these demand/supply conditions will range between US$38 and US$40 a barrel. But, of course, those are based on fundamental demand/supply conditions. How the market reacts due to expectations and concerns about disruption of supply, this is reflected in both spot prices and future prices.

As I have said in my answer, the momentum of growth in Singapore is still very strong. We have had an average of 10% growth for the first half of this year

and we are already coming to the end of the third quarter. The numbers for July show that the momentum has been maintained. We are reasonably confident that we should be able to end the year within our growth forecast. If oil prices remain persistently high, even to the level of US$100 per barrel, then the impact will affect us more in the longer term, ie, in 2005 and 2006, and for that we have to monitor and assess it separately.

Sir, I would like to ask the Minister two questions. Given the time lag between the persistently high oil prices and its impact on the economy, I would like to ask the Minister what is the likely impact on the consumer price index for the coming year. Secondly, is the Ministry, together with any other Ministry, makingconcerted efforts to reduce our reliance and dependence on oil given that oil prices are going to be volatile in the foreseeable future?

Mr Speaker, Sir, as I explained in my answer, the CPI impact is still very moderate for the time being. The overall global inflation situation is still reasonably benign. Energy prices impact only a small component of the overall inflationary picture. So we do not expect the inflationary situation to get out of control. But obviously energy prices can feed to other costs and this will reflect itself in the CPI later on after a lag.

On our dependency on oil and other related energy sources, as I explained in my answer, we import everything we use, and this is a long-term strategy that we have undertaken since the 1970s and 1980s to reduce our reliance on oil and other energy sources through diversification, alternative uses and through uses of other modes which are more efficient and to conserve the use of energy. For example, the Ministry of Environment and Water Resources is promoting the use of alternative fuel for cars. Our two biggest

uses are electricity generation and transport. For electricity, we have gone to gas and we are looking at other sources. For transport, I think LTA is promoting the use of other modes of public transport as well as other energy sources.

3. Mr Ng Ser Miang asked the Minister for Trade and Industry when will Singapore implement the Asia-Pacific Economic Cooperation Business Travel Card scheme which Singapore agreed to join in October 2003 as the scheme will allow Singaporean card holders visa free travel in 15 APEC economies, facilitating business travel between these economies.

Question No. 3, Sir. I would like to declare my interest as Singapore's representative on the APEC Business Advisory Council.

Mr Speaker, Sir, the target is to implement the Asia-Pacific Economic Cooperation Business Travel Card (ABTC) Scheme by the middle of 2005.

The Ministry of Trade and Industry (MTI) and the Immigration and Checkpoints Authority (ICA) are currently working out the implementation details of the scheme. These include:

translating the requirements imposed by the Scheme into eligibility criteria for Singaporean businessmen who may wish to apply for the card;

putting in place an effective and efficient security pre-clearance process for foreigners in other countries applying for the card to enter Singapore; and

deciding on an appropriate charging model for the card.

Sir, I would like to ask the Minister whether there is any way to expedite the earlier implementation of the scheme as it does save considerable time for Singapore businessmen travelling to those APEC economies that arecovered under the scheme.

Sir, we announced our intention to participate in the scheme some time last year and if you look at the experience of the other APEC economies, it takes aboutone and a halfor almost two years to put in the system. In the light of increased security requirements, we have to make sure that the processes we put in place are robust. In the end, we have to callfor a tenderfor somebody to provide both the security requirements as well as the processes for the card. Unfortunately, all this takes time.

4. Mdm Halimah Yacob asked the Minister for Trade and Industry (a) how many percent of households are in arrears of their water and electricity bills; (b) what is their average period of arrears; (c) if they are in arrears, what are the circumstances, which will cause Singapore Power to cut off supplies; and (d) whether Singapore Power will re-introduce the voucher scheme to help needy Singaporeans, some of whom are still unemployed or drawing low income.

Mr Speaker, Sir, as at June 2004, 9,781 household utilities accounts, comprising0.93% of all household accounts, are in arrears for three months or more. The average period for all accounts in arrears is 1.53 months.

SP Services does not disconnect utilities lightly. SP Servicessendsthree

reminders within eight weeks after the original bill, if payment is not received. The last reminder is the final notice before electricity is disconnected.

SP Services assists consumers with financial difficulties with suitable instalment plans to pay their arrears. If a consumer defaults on his payment plan, SP Serviceswould try to accommodate by arranging a second payment plan.If the consumer defaults on the second payment plan, his electricity supply will thenbe disconnected. If the consumer continues to default on his payment, SP Services would install a "thimble" in the consumer's water pipe to limit the flow of water.If the consumer whose electricity supply has been disconnected reduces his arrears by 40%, SP Serviceswould normally allow reconnection.

Any household facing financial difficulties may seek assistance from the CDCs and CCCs. The CDCs administer MCYS schemes, such as the Rent and Utilities Assistance Scheme, and the Interim Financial Assistance Scheme. CCCs also offer localised schemes to assist families who need help with their utility bills.

The utility voucher was a one-off programme introduced by SP Servicesduring the economic downturn and the SARS period in July 2003. As at 3rd August 2004, only 5,560 of the 16,800 vouchers, ie, about 33%, were used. There is, therefore, still a significant proportion of the vouchers available for use.

At the National Day Rally on 22nd August 2004,thePrime Ministermentioned that one way of helping households to manage their electricity consumption was to have a pay-as-you-use scheme. SP Services will roll out a pre-paid meter scheme progressively by May next year. This scheme will be available to HDB households whose electricity supply has

been disconnected due to payment default. Under this scheme, prepaid electricity meters will beinstalled at such households' HDB flats. This would assist the households to consume what they can afford to pay and, therefore, prevent their arrears from increasing. SP Services will announce the details of the scheme at a later date.

Sir, I would just like to ask the Ministerwhether (a)he considers payment of 40% of arrears before reconnection of the utilities is too high; (b)Singapore Power will consider a lower payment before reconnection;

As the hon. Member pointed out, this 40% requirement is a hurdle which our residents have to cross. As MPs, we realise, sometimes, they find difficulty in crossing this hurdle, and that is the reason why thePrime Ministersuggested having a pre-paid card which will allow the defaulter to continue to use, as long as he is able to pay a small amount to his old arrears and pays as he goes along. So, we all agree that the metering system, a pre-paid cash card, is the better way to go. SP Services is trying to roll this out as quickly as possible, but they have to make sure the system is robust. They have to test it out and, therefore, they have to put it on a trial period first, and the earliest they can roll it out is May next year.

Sir, the Minister did not answer the last question, ie, what happens to those who cannot even afford the pre-paid cash card?

As I mentioned in my earlier reply, there are several

agencies on the ground that the residents can approach for help. They can see the CDC and CCC, and many of them do approach their MPs for help.

Sir, may Iask if the Minister would ask SP Services whether they are willing to delay cutting offthe utilities during examination periods?

If we look at the process of sending out the reminders and the process of appeals andpayingof instalments, it is a fairly long process. Therefore, if households can manage their budget correctly,there is no reason why disconnection should occur during the examination period.

Mr Speaker, Sir, I would like to ask the Minister to help these families to review their utilities bills, especially thosecases where their utility supplies have beencut off. They have to be helped to review their billsto reduce their utilities expenses.

As an assistance toMembers, SP Services sent out to all MPs the typical utilisation for different household types. So, I am sure all Members, when we receive a case,will look at their bills and, if it is a two-room flat and the bill is on the high side, we try and interview the resident a bit more to find out what appliances they are using which cause them to have such a high bill. I think we do all that regularly in our meet-the-people sessions. SP Services does undertake requests from MPs. As we all know, if we find that the consumption is on the high side, SP Services sometimes goes down toinvestigate to see whether there is a leakage, etc. So, these processes are in place.

The following Question stood in the name of Mr Yeo Guat Kwang -

5. To askthe Prime Minister and Minister for Finance in view of the potential further increases in oil price, will the Ministry review the rate of taxi diesel tax and the petrol ad-valorem tax, to ease the adverse impact of escalating oil price on cost of living and business cost.

Question No. 5, Sir.

Sir, there are no plans at present to review the diesel and petrol taxes.Singaporeimports all the oil that we consume. Therefore, we have to take price signals from the world rather than insulate ourselves from price changes. Consumers should adjust their behaviour in accordance with the changing prices.

On petrol duty, I would like to clarify that in February 2003, we changed the system of taxation of petrol,replacing the ad valorem tax with a fixed rate of petrol duty per litre of petrol. The tax payable under this fixed rate is lower than what it would have been under the ad valorem tax, given today's high petrol prices.

Sir, taxis pay a fixed special tax per year. This approximately compensates for the absence of a tax on diesel equivalent to the petrol tax. We should keep the quantum of this special tax in line with the petrol tax, and only adjust the two together.

Commercial and public transportation vehicles are not subject to any fuel tax.

6. Miss Penny Low asked the Prime Minister and Minister for Finance whether he will consider extending the tax breaks and lower maid levy to singles who are taking care of their aged parents or disabled siblings.

Sir, the tax breaks for taking care of aged parents or disabled siblings are already available to singles. Singles can also benefit from the lower maid levy from1st Augustthis year for taking care of elderly parents. The tax relief per aged parent aged 55 and above is $3,500 or $5,000, depending on whether the taxpayer is staying with his parent. It goes up to $6,500 or $8,000 if the parent is disabled. The tax relief is $3,500 for each physically or mentally disabled spouse, child or sibling that the taxpayer supports.

From 1st August 2004, the employer of a foreign maid will pay the lower foreign domestic worker levy of $250 per month instead of $345, if his elderly parent aged 65 and above stays with him.

Would the Minister of State consider extending this lower maid levy to singles who are taking care of parents or disabled siblings who are below 65 years old?

Sir, allow me to clarify whyage 55 was used for the tax reliefand age 65 was used for the foreign worker concession.

Age 55 was used as the age cut-off forparent relief because when the parent relief was put in place many years ago, age 55 was the retirement age norm. However, for the discount on the maid

levy, the Ministry of Manpower has explained that the foreign worker levy concession is not pegged to the retirement age of the elderly person. Instead, it is consistent with the definition of senior citizens used by the Ministry of Health to qualify forthe concession at polyclinics and for medical prescription fees. Therefore, any lowering of this age would be inconsistent with the application of the second guideline.

Would the Minister of State agree that there is an increasing trend of singles taking care of aged parents and disabled siblings, and certainly there is a cost to that? For singles, especially those from the lower income family, working is going to be essential to bring back the bread and to take care of their family. Would the Minister of Stateconsider extending, first, the tax breaks and the maid levy to this group of people who are taking care of disabled and aged parents or siblings, and the additional two days off for singles who may be taking care of this group of people?

Sir, the tax breaks and reliefs are really part of a holistic approach towards looking after the respective groups. The Ministry monitors and reviews these from time to time, and I will ask the Ministry to bear Miss Low's suggestions in mind at the next review.

Sir, will the Minister of State also consider extending the tax breaks and lower maid levy for husbands to claim on behalf of the family and pass on the tax benefits to the wife when the wife sacrifices her own career and chooses the equally important role of a stay-at-home mum to take care of her children?

Mr Speaker, Sir, I will ask the Ministry to consider the hon. Member's suggestion.

7. Ms Olivia Lum Ooi Lin asked the Prime Minister and Minister for Finance as the move by the Government to apply Public Private Partnership on large projects exceeding $50 million will definitely benefit many large private companies but not many SMEs, has his Ministry any plans to further encourage the public sector agencies to critically review areas of works or services that can be farmed out to the SMEs under similar PPP arrangements.

Sir, I would like to thank the Member for her interest in the Public Private Partnerships initiative. Public Private Partnerships (PPPs)are long-term contracts where the private sector provides services and facilities to the Government. A typical PPP requires the private sector to design, construct, finance, maintain and operate facilities over a period of 15 to 30 years. Previously, the Government would have undertaken each activity with a different company. Under a PPP, the private sector will bring these same or similar companies together, often as a consortium, to undertake the whole project.

Sir, because of the complexity and long term nature of PPP contracts, there are greater administrative costs involved. The Government can expect to save overall using PPP only if the projects are relatively large. The Ministry of Finance has set $50 million as a guide, meaning that all projects above $50 million should be considered for suitability as a PPP, while projects less than $50 million can also be considered, depending on the nature of the project.

Small and Medium Enterprises (SMEs) can participate in the PPP consortiums as partners, contractors or subcontractors. In addition, SMEs can continue to

contract directly with the Government for projects below $50 million.

PPP contracts basically involve the provision of new services and facilities. As for current services, all public sector agencies are now required to increasingly market test non-core services which they are doing in-house. Under this Best Sourcing directive, the services will be outsourced if private sector vendors can offer the services more economically.

In summary, Best Sourcing and PPP together present more opportunities for SMEs to be involved in the delivery of public services.

Sir, may I ask the Minister of State what is the value of these works and services that are planned to be farmed out to the local SMEs? Because of this Best Sourcing exercise, I am sure that the local Government agencies would be able to farm out as much of these services as possible to the local SMEs.

Sir, for FY03, the total contract value awarded as a result of Best Sourcing projects is $16.8 million.

8. Dr Teo Ho Pin asked the Minister for National Development (a) how many farms from Malaysia are supplying live chickens and ducks to Singapore; (b) what are the measures taken to prevent outbreaks of the Avian flu; and (c) whether there is any traceability or information dissemination plan which will inform consumers immediately upon the detection of diseases of imported chickens or ducks.

Mr Speaker,Sir, the Agri-Food and Veterinary

Authority (AVA) has accredited 135 chicken farms, mostly located in Johor, and 42 duck farms, mostly in Perak, to supply live poultry to Singapore. AVA has also accredited 20 farms, located in Malacca and Johor, for the supply of eggs. Together, these Malaysian farms supplied about two-thirds of eggs consumed in Singapore, half of the chickens and 90% of ducks.

To prevent the Avian flu, in particular, theHighly Pathogenic Avian Influenza (HPAI) from coming into Singapore,AVA only allows import of poultry and birds from countries or regions that are free from HPAI. Stringent checks are also carried out on all consignments of live poultry at the point of entry. These are supplemented by testing of blood samples collected from the live chickens and ducks as well as further inspections at the poultry slaughterhouses.

Within Singapore, at the local poultry farms, AVAhas imposed strict bio-security measures. These include restricting visits to the farms, disinfecting vehicles before they enter the farms, requiring farm workers to wear protective clothing, and securing the poultry houses against wild birds.

AVA has also in placecontingency plans which can be activated immediately if and when HPAI is detected, whether among the live poultry imports or at the local poultry farms.

AVA maintains close liaison with its counterparts inMalaysia and has jointly established the communication links and the protocol to stop imports immediately should HPAI be detected or suspected in chickens or ducks from Malaysia.

Under AVA's farm accreditation system, all chicken and duck consignments can be traced back to the farms from which they originate. In addition to the veterinary health

documentation required for each import consignment, each poultry crate is labelled with information on the farm of origin. In other words, the local poultry slaughterhouses thus have the ability to trace and recall products from the market, if necessary.

I would like to ask the Minister what is the procedure that has been put in place to determine if the ban on the restriction for import of live chickens and ducks from Malaysia would be lifted. What will be the trigger point? Could the Minister also update us on the shortage of eggs in Singapore? My understanding is that there is a severe shortage. Why is therea shortage if there were measures to import eggs from other countries?

Mr Speaker, Sir, firstly, Dr Amy Khor asked what is thetrigger point for the lifting ofthe import ban. Basically, AVA will considerlifting the ban only after Malaysia is able to declare that Malaysia isfree of the bird flu. Under the OIE requirements, this couldtake place 21 days afterthe Malaysian authorities have taken action to eradicate the causes of bird flu. In this particular situation, Malaysian authorities culledall the chickenswithin the affected areaby20th August. So the countdown of 21 days startson 20th August. Assuming that21 days after20thAugust,there is no new case of Avian flu infection, Malaysia will be able to declare to OIE that Kelantan isfree ofAvian flu. That is the earliest day when AVA will be able to consider lifting the import ban.

Secondly, Dr Amy Khor asked why there is ashortage of egg supply in Singapore.Basically, local production of eggs is sufficient to meet only 30% of our consumption. The remaining 70% is direct import from Malaysia. In addition to that, over the years, AVA has encouraged the traders to source for

alternative sources.Today, we have eggs coming from Australia and New Zealand but they account for less than 1% of the market consumption. The reason why these sources have not taken off isthe higher costs of the eggs. For example, eggs from Australia and New Zealand will costbetween 35-40 centsper egg. So, under normal circumstances, consumers obviously will go for cheaper eggs and, as a result, there is no demand for the more expensive eggs. In other words, even though there are alternative sources,under normal supply situation, they are not able to compete due to the high costs. Andwhen there is an outbreak, when 70% of the supply from Malaysia is being stopped,the supply drops from 100% to 30%, plus1% or so from Australia and New Zealand. This is the reason why we have this shortage today.

The AVA has alsobeen encouraging the importation of liquid eggs and powder eggs. For example, many of the larger users -hotels, bakeries and so on,over the years,have started switching to the use ofpowder eggs and liquid eggs. So, over time, hopefully more and more of the largerusers will looktoalternative solutions.

On the whole, I would say that on the part of AVA, we will do whatever we can to achieve three priorities in food supply. Firstly,adequate supply in terms of quantity, secondly, safety of supply, and thirdly, stable pricing. Under normal circumstances, we would be able to achieve all three priorities. But, from time to time, when there is an outbreak of diseases, like the case ofHPAI, I think some temporary shortage will be unavoidable and I hope thatthe public could bear with us as we go through this temporary situation.

Sir, I have three supplementary questions. Who is

checking on the price of these chickens and eggs to ensure that there is no rampant profiteering by the supplier and the sellers as a result of the AVA ban? The second question is: what is the Government's long-term plan towards solving this sudden shortage of supply due to severe disease contagion? What is the alternative supply route that the Government is currently exploring? My third question is: will the Government also consider liaising with the Indonesian government to rent land from our neighbouring islands to start modern skynet cover, also called concealedfarming, so as to prevent bird flu, infections by wild birds and keep a more stable supply of chickens for our future use?

Mr Speaker, Sir,AVA does monitor the prices in the market. But I think what Mr Steve Chia is asking is whether we can do something to prevent the escalation of prices.Sir, this is not possible because, as I mentioned earlier, supply has dropped from 100% to 30%. When supply is not able tomeet demand, obviously prices will go up.

Mr Steve Chia may want to know that,at this moment, more and more trading houses arebringing in alternative supply from Australia and New Zealand, andfrom the Netherlands too. These sources of supply will be more expensive.In other words, we are going to see prices going up in the market, firstly, due to shortage of supply and, secondly, due to the higher costs ofalternative supply. Therefore, price escalation in the short-term is unavoidable.

Secondly, Mr Steve Chia asked what are the long-term plans to prevent this sudden shortage in supply. As I mentioned earlier,we have put in place alternative supply from Australia, New Zealand and the Netherlands,as well asliquid eggs,powder eggs. The reason why these have not taken off in a big scale is

thehigher costs of supply. In other words, today, consumers do havea choice. If they are prepared to paya higher pricefor the additional supply, the supply will be there. For example, NTUC FairPrice is bringing in eggs from Australia. By the time it comes to the marketplace, it will cost about 40 cents per egg. So for those who are prepared to pay 40 cents per eggfrom Australia, the supply will be there.

Thirdly, Mr Steve Chia asked whether we have looked into places like Indonesia. Sir, let me just point out thatin fact, most of the Asian countries are affected by theHPAI. In other words, today, we cannot import eggs or chickens from Indonesia, Vietnam, Thailand, China, Korea and Japan because they are all affected by the Avian flu. My point here is that while it is easy to talk about developing alternative sourcesin nearby countries,in practice, it is very difficult to do so because when the disease hits us, it hits the entire region. But, notwithstanding that, I do not rule out the possibility. In fact, in my dialogue with the slaughter houses last week, one of the gentlemen asked whether it is possible for them to pursue the concept, and I told them that AVA will facilitate. In other words, if they are prepared to put in the investment and necessary measures to ensure that a particular island or region issafe fromAvian flu,AVA is prepared to look into the possibility of accrediting that particular farm as a potential source of supply. But we will leave all these to the market forces to decide.

Sir, will the Minister consider extending the rebate period for businesses that continue to be affected upon expiry of the current rebate period?

Sir, as I mentioned earlier, the next review on the lifting of import ban will be on 11th September.In the event that we are not able to lift the

ban and that the ban has to be imposed for a longer period, the AVA and the relevant agencies will consider extendingthe rebate duration. The next reviewwill be on 11th September and we will take it one step at a time.

One last question on chickens and eggs. Dr Khor.

Thank you, Sir, back to the egg question. I would like to ask the Minister if AVA would consider allowing the local suppliers of eggs to boost production of eggs in Singapore to alleviate this issue of production going down from 100% to 30%.

Sir, on the part of AVA, we do not impose any limitation on the number of eggs that the egg farms are allowed to produce. In other words, this is purely a business decision.

The following Question stood in the name of Ms Irene Ng Phek Hoong -

9. To ask the Minister for Education, in view of the plan to offer scholarships to 100 to 200 students each year for them to develop a deep understanding of Chinese culture and history and a strong command of the Chinese language, whether scholarships can also be offered to students to develop them into world-class Southeast Asian specialists, as Singapore is located at the heart of Southeast Asia.

Question No. 9, Sir.

Mr Speaker, Sir, Singapore ispart of Southeast Asia and ourfuture will always be interwoven with that of the region. It is therefore

important for us to develop an understanding of the region, and nurture Singaporeans who feel confident and assured in operating in the region.

There are several dimensions to this effort in education. First, there is significant emphasis on Southeast Asiain our school curriculum. Southeast Asia is studied in subjects such as Social Studies at both the primary and secondary levels, and History and Geography at the secondary and pre-university levels. In History, for example, students develop an understanding of the key historical developments that shaped Southeast Asia,like colonialism, nationalism and independence. All students are also engaged in National Education (NE), an integral part of which is an awareness of Singapore'sposition in the region and how developments in our neighbouring countries can affect us. These efforts build an appreciation of the diversity of the region and an understanding ofthe challenges and issues that the countries in the region face.

It is also important to develop a group of students who have a strong grasp of the Malay language. We encourage students who take Malay as their Mother Tongue languageto study Higher Malay if they have the ability to do so.We are also nurturing a Malay bilingual elite through the Elective Programme in Malay Language for Secondary Schools (EMAS) and Language Elective Programme (Malay) at the junior collegelevel. This year, there are 473 students in EMAS (from Secondary 1 to 4) and 30 students in the LEP (Malay) (from JC1 to JC2). These students offer Higher Malay as well as learn about Southeast Asian culture and society in their curriculum. The LEP (Malay) students receive MOE scholarships and go on immersion programmes in Malaysia.

MOE will continue to encourage eligible students to take these special programmes and electives, and deepen the content of the programmes if there is a demand for this.

Non-Malay students can offer Malay as a third language.

Some schools also offer conversational Malay classes to their students as an enrichment option, either during formal curriculum time or after school hours. We encourage schools to do so.

Our universities also run undergraduate programmes focusing on Southeast Asia. NUS offers a Southeast Asian Studies programme for undergraduates which has close to 40 modules covering socio-political and cultural issues in the region. Students involved also do a language module in Bahasa Indonesia, Vietnamese orThai.

Finally, we continue to develop scholarship and specialist research on Southeast Asia. The Institute of Southeast Asian Studies(ISEAS) regularly hosts well-known scholars on regional issues fromSingapore and overseas. It is generally recognised as one of the leading centres on Southeast Asian Studies. ISEAS has awarded over 50 graduate scholarships to Singaporeans, and held many public seminars and talks on regional affairs. In addition to ISEAS, the Asia Research Institute at NUS is undertaking as one of its areas of focus, research on Southeast Asia, including topics such as interactions between Southeast Asia and China. At NTU, the Institute of Defence and Strategic Studies (IDSS) also has electives and programmes for post-graduate students focusing on Southeast Asia.

As the Memberhad pointed out, Singapore is at the heart of Southeast Asia. Our students are exposed to the study of our region at many levels, starting with a general awareness and knowledge in primary schools and up to

specialised, scholarly study of Southeast Asia at the tertiary level. We also have good programmes in place to groom a Malay bilingual elite, and we will deepen the cultural and contemporary knowledge content of these programmes where there is demand.

Sir, may I ask the Minister, given the rise in the Indian economy, and to some extent, the other South Asian economies and the linguistic and cultural diversity in that part of the world, what initiatives does the Ministry have to ensure that our students are well positioned to take advantage of those opportunities as well, as we also focus on Northeast Asia and Southeast Asia?

I thank Mr Iswaran for his question. First, we have some advantage in engaging India because the English language is the medium of instruction in our schools. In India, the English language has been the language of government and a good part of business since colonial days, andnow, more than ever, it is the language of the professions,government andhigher education. But there is more we can do. We are encouraging, first, our schools and universities to link up with institutions in India, so that beyond the language we really get to know the Indians,understand the landscape and be more familiar with contemporary India.

Second, through our syllabus, we are doing a fair bit. India features quite regularly in our syllabus - history, social studies and so on - even starting from the primary level. Members, I am sure, would recall the history syllabus which taught us all about the Indus Valley civilisation. It is still there, but we have extended it to a lot more recent Indian history as well.The mother tongue languages that we teach in Singapore, Tamil and for the non-Tamil Indian students their own mother tongues, would also play an important

role.But I would reiterate that our strength in the English language is a major advantage that we have in engaging India.

10. Mdm Halimah Yacob asked the Minister for Education in view of the mounting complaints against private schools whether his Ministry will consider regulating such schools to ensure better standards as well as fair treatment of the students.

Mr Speaker, Sir, under the Education Act, private schools have to be registered with the Ministry of Education before they can operate. As part of the registration process, these schools have to comply with the statutory requirements on building and fire safety; an acceptable curriculum; and whether the teachers have basic academic qualifications for the courses offered.

There are provisions in the Education Act for the Ministry of Education to cancel the registration of a school, for instance, if the school's committee of management is not administering the school efficiently. The private education sector is a very diverse one. Private schools offer a wide range of educational programmes, including tuition, enrichment, and continuing education programmes. So it is not practical for the Ministry of Education to monitor and regulate the quality standards of all the private schools in Singapore. The Ministry of Education believes that it is better for the industry to work with the accreditation agencies to differentiate, as well asto raise the overall standards of the private schools.

SPRING has launched the Singapore Quality Class for Private Education Organisations (SQC-PEO) scheme in 2003 to recognise business process excellence. To recognise institutions for providing

quality education, SPRING in consultation with industry players is drawing up an accreditation scheme, and is targeting to launch this schemenext year. We are also supportive of various industry associations such as the Singapore Education International (SEI), Association of Private Schools (APS), and the Association of Small and Medium Enterprises (ASME) taking on the initiative to help private schools upgrade as well asto provide recognition for those who do so.

In addition, CASE is working on a CaseTrust for Private Schools scheme to help safeguard the interest of the students. STB has also launched the Singapore Education website in 2003 and is actively promoting it. This website provides information to help all potential students who want to study in Singaporeto get reliable information about the private education sector here. Students wishing to enrol in private schools can then make an informed choice.

Sir, considering that we have been adopting this promotional self-regulation approach for a long time,and as the Minister of State mentioned, last year the Quality Class Award was also introduced,we had 300 complaints against private schools this year. How effective does the Minister of State think that these new measures would be in terms of curbing complaints against private schools and would we be very successful in drawing 150,000 foreign students by 2010, that being the target of the Singapore Government?

Sir, we do admit that there are areas that we could improve on. That is why, as I have explained in the answer, we are putting in schemes to improve things. You look at the situation, say, next year, when all the schemes are in place, we would actually

have four levels of accrediting and standards assurance. At the basic level, there is the operationalstandards regulated bythe Ministry of Education through regulation through the Education Act. At the next level, we have CaseTrust which is done by CASE. This ensures that student welfare is taken care of. Then, at the next higher level, it is the current Singapore Quality Class (SQC). This is to ensure that there is a certain degree of business excellence. At the highest level, there is accreditation of academic standards andexcellence by SPRING. So, by next year, the schools would be monitored with four levels of regulation and we hope things would improve.

Sir, other than meeting the physical requirements under the Education Act, does the Ministry also check on the financial position of these private schools before they can start?

We definitely would check on this before they are allowed to be registered. When it comes to the business aspect,as I have said, we have the Singapore Quality Class standard (SQC) which is done by SPRING. Of course, as businesses, the private schoolswould also have to submit the regular audit reports to the relevant agencies. If there should be complaints by students or by members of the public on things that are going wrong, we would definitely investigate.

Mr Speaker,in view of the fact that there have been several cases involving foreign students - CaseTrust probably would have emphasised on the foreign students -would CaseTrust also be taking into consideration the interest of the local students as well?

I believe CaseTrust is taking care of all students, whether foreign or local.

May I ask the Minister of Statehow many licences had been issued by the Ministry of Education to the private schools? And, so far, has any actionbeen taken against those schools that had not complied with the standards set by MOE?

I am afraid I do not have these figures with me. But I just want to say that investigatingcomplaintsis a routine affair. Investigations leading to the schools being deregistered is quite rare.Most of the schools act on public feedback andcomplaints byadjusting the procedures and improving on things.

The following Question stood in the name of Mdm Ho Geok Choo -

11.To ask the Minister for Manpower in view of the stronger economy (a) whether the wage restructuring efforts and CPF cuts have enhanced employability of older workers; (b) whether there are plans to tackle the long-term unemployment of the older people, and if so what are they; (c) whether there is any focused programme to promote the idea of self-employment, and if so, what is it and its result; (d) how is the Government reaching out to help the unemployed old and working poor aside from the efforts of the Workforce Development Agency; and (e) how can the Government's effort be made more visible and to leverage jointly with the efforts of other non-government agencies.

Question No. 11, Sir.

Mr Speaker, Mdm Ho asked about older workers. Allow me to give some figures. The re-employment rate of

workers from 40-49 years old as at first quarter this year was 51.5%. This isthe national average. However, the re-employment rate of those above 50 remains lower than the national average. This is partly because some older workers withdraw from the labour market when they lose their jobs. The long-term unemployment rate - this is defined as someone who has not found a job six months after he has lost his previous job -for older workers above 50 yearshasrisen above the national average. It is 2.3% in the first quarter of this year, compared to the overall rate of 1.5%. So, yes, those above 50 are finding it difficult to be re-employed.

In this context, wage restructuring,changes to the CPF for older workers, which Mdm Ho asked about, were necessary measures to ensure that our workers, especially the older ones, remain cost-competitive. In particular, moderating seniority-based pay systems, where older workers get paid more than younger workers for doing the same work was important. The changes to CPF contributions for older workers should also be seen in this context. These changes, correctly incentivise companies to employ, reward and retain workers based on their performance regardless of age. And, therefore, even as the economy recovers, companies need to continue with efforts to restructure their wage systems.

Beyond wage restructuring, the Singapore Workforce Development Agency (WDA) adopts a multi-pronged approach to help older workers get jobs. To encourage employers to employ older workers, we administer the People-for-Jobs Traineeship Programme (PJTP). As at July 2004, the programme has benefited 18,500 older workers.

A second area that WDA is focusing on, which Madam Ho had asked about, isself-employment. The Self Employment Training (SET) Programme waslaunched

in 2002, and this programme provides specific skills such as analysing business opportunities, sales and marketing, finance and accounting, human resource management and legal aspects of establishing a business. To date, some 6,829 Singaporeans have been trained under this programme. Recently, WDAalso launched the Retail Incubator Training Programme aimed at training Singaporeans to operate their own push-cart retail business and over 600 Singaporeans registered for the programme.

We are continuing tohelp lower-skilled and older workers through training. Members may have heard ofFLOW, which is Functional Literacy For Our Workers, which we help workers who had little formal education to quickly acquire the level of literacy required at the workplace. And, we will continue with suchwork-readiness programmes in addition to many Place and Train programmes.

We would also work closelywith employers and the human resource community to correct misperceptions towards older workers. Enlightened employers recognise the value that older workers bring through their loyalty, experience and maturity and that these workers could contribute significantly to the company.

Mdm Ho asked aboutnon-government agencies. We have been working very closelywith non-government agencies such asNTUC and the people sector,self-help groups and the CDCs, to increase our outreach to the unemployed andto provide employment assistance. We will continue to work with a range of agencies to increase our outreach to the unemployed as well as lower skilled and low wage workers, to help them maintain their employability through retraining and upgrading.

12. Dr Ong Seh Hong asked the Minister for Manpower, in the light of the Prime Minister's announcement of the reduction of foreign maid levy (FML) for family with children under the age of 12, will his Ministry consider also reducing the FML for families with sick and dependent elderly or disabled persons who are equally, if not more, in need of the service of domestic maids and in allowing this encourage families to care for them in the community rather than to send them for institutional care.

Sir, the foreign domestic worker (FDW) levy concession forms part of the overall package of measures to address our declining birth rates. The committee recognises the integral role of grandparents in encouraging and supporting younger Singaporeans to start families. This was the key reason why the grandparent tax relief and the levy concession were also extended to families with elderly parents or grandparents. To qualify for levy concession, the elderly need not be sick or dependent but must be 65 years or older and staying with their children.

For households with disabled family members, which the Member has asked about, there are already several other measures available, such as the handicapped child, spouse or parent tax relief, which can be used to offset the cost of employing a foreign domestic worker. The Ministry of Community Development, Youth and Sports (MCYS) also works with voluntary welfare organisations to provide programmes for people with disabilities. MCYS funds programmes geared towards helping families care for such persons in the community instead of placing them under institutional care. These programmes

include Day Activity Centres for adults with disabilities, integrated childcare and special student care centres for children. I understand that MCYS is studying further options to assist the disabled and will considerthe Member'ssuggestion in its deliberations.

13. Mr Gan Kim Yong asked the Minister for Manpower (a) whether he will give an update on the employment situation in Singapore; and (b) what is the progress his Ministry has made in the introduction of the variable wage system.

Mr Speaker, Sir, my Ministry recently released the preliminary labour figures for the second quarter of 2004 where we reported an increase of 10,400 jobs. This is the fourth straight quarter of employment growth, bringing a total of 41,000 jobs over a one-year period. Overall, employment is at a 2-year high of 2.16 million. The majority of the employment opportunities during this one-year period are in the services sector with 33,000 jobs. Manufacturing created 17,000 jobs in the same period.

Alongside increasing employment levels, the number of retrenchments has also fallen. Preliminary estimates for thesecond quarter of 2004 saw the number of workers retrenched fall to 1,900, the lowest in 3 1/2 years. Overall, unemployment stands at 4.5% in the second quarter of 2004, for the third consecutive quarter. The rate remained constant despite the entry of fresh graduates into the labour market. Thus, the overall picture is of an improving labour market and unemployment is expected to fall further towards the end of the year.

Sir, let me now reply to Mr Gan's second question, which is on the progress of the introduction of the variable wage system. Following the release of the recommendations of the Tripartite Taskforce on Wage Restructuring at the National Tripartite Conference on 30th January 2004, my Ministry, in collaboration with the social partners, has actively reached out to companies in various sectors to encourage and assist them to implement wage restructuring.

The Taskforce had earlier formedfour working groups to spearhead the wage restructuring efforts in the electronics, hotels, chemicals and land transport sectors.Commendable progress has been made so far. Many companies in these four sectors have taken steps to restructure their wage systems. Last month, Raffles Hotel successfully concluded their discussion with the union to restructure its wage system. Three more working groups have been formed in the banking, insurance and food manufacturing sectors to drive the implementation of flexible wage system in these sectors. The Banking Working Group released their recommendations on 6th August 2004, just a few days ago.Several major banks, including the UOB Group, have already implemented the flexible wage system based on the recommendation of the Taskforce. Many other banks are likely to follow suit. The othertwo Working Groups - Insurance and Food Manufacturing - are targeted to release their recommendations in September.

Response and feedback from companies have been encouraging, particularly among the larger establishments. Most of them have either implemented or are in the process of implementing at least certain aspects of the Taskforce's recommendations that are suited to their needs.

To gauge the progress of the implementation, the Ministry has just completed a survey on the extent to which firms have adopted the Taskforce'sthree key recommendations to improve wage flexibility and competitiveness, namely:

introduceor build up Monthly Variable Component;

enlarge Annual Variable Component and formulate key performance indicators to link the AVC payment closely to company's and/or individual's performance; and

move away from seniority-based wage system and narrow the salary maximum-minimum ratio to an average of 1.5 or less.

Details of the survey findings will be released shortly.

Sir, I would like to ask the Senior Parliamentary Secretary whether he could give a specific update on the progress made by the smaller SMEs in Singapore in this wage restructuring exercise.

Sir, I would say that, generally, we have made progress with SMEs, but there is a lot of work to be done. Apart from the tripartite partners' efforts to facilitate wage restructuring among companies, including SMEs, the Ministry is organising a seminar for them at the end of September to help them implement the wage restructuring. We will work together with our social partners including the Singapore Business Federation, the Singapore Chinese Chamber of Commerce, the Association of Small and Medium Enterprises as well as the Singapore Manufacturers' Federation. This is important so that they can

help us rope in the support of the SMEs and to enhance their understanding of what it takes to restructure the wage system.

I do not have the figures now but I would say that we are already reaching out to SMEs in the various sectors.

The following Question stood in the name of Mr Yeo Guat Kwang -

14. To ask the Minister for Manpower how does his Ministry assist professionals, executives and managerial employees resolve salary disputes with their respective employers.

Question No. 14, Sir.

Mr Speaker, Sir, the Ministry does provide conciliation service for managers and executives to resolve disputes with their employers even though they do not fall within the ambit of the Employment Act. In 2003, about half of the disputes, ie, 297 or 48%,referred to the Ministry's Labour Relations Department for conciliation or advice were resolved amicably. Of the other half, some of the claims could not be substantiated, while others withdrew their claims mainly because their employers were in serious financial difficulties and these executivesdid not see the benefits of pursuing their claims further. Executives who are unable to resolve their claims at the Ministry can pursue their claims at the civil court.

MOM recognises that some executives do need assistance in taking up their grievances with management. This is

why in September 2002 the Industrial Relations Act was amended to allow executives to join and be represented by the rank-and-file unions in their workplace on matters relating to payment of retrenchment benefits, dismissal and breach of contract under this Act. Executives who are members of a union can approach their union for assistance should they encounter a problem with their employers in any of these areas.

Sir, I would like to ask the Senior Parliamentary Secretary whether the Ministry will consider amending the Employment Act to allow the executives/managers access to the labour court. And I would like to repeat the point that it is access only to the labour court in terms of claims for arrears of salaries and other disputes and not access to other provisions of the Act, as the feedback is that the existing voluntary method of conciliation has been not so effective in helping executives/managers to resolve their disputes. And settling their claims in the civil court is too expensive for executives, Sir.

Sir, I would say that the current system works. Let us see how it works further to help executives to protect themselves in the face ofdifficulties at workplaces. But should there be any need in future to consider amending the Employment Act, we will keep our options open.

Sir, may I ask the Senior Parliamentary Secretarywhether the Ministry knows of the number of cases that the complainants took their cases to the civil court?

Sir, in 2003, out of 621 cases handled based on complaints from executives, 3% took out civil court proceedings against their employers.

15. Mr Low Thia Khiang asked the Minister for Manpower how many jobs are needed to be created annually over the next 5 years to keep the residential unemployment rate stable.

Mr Speaker, Sir, our local labour force will grow by around 36,000 people each year over the nextfive years. This islargely due to the new school leavers entering the labour force each year. This would be the net job growth required to keep the residential unemployment rate stable, all other things being equal.

Sir, what is the projection of the Ministry in terms of stable long-term unemployment rate? How many jobs need to be created in the long term in order to maintain the rate?

Sir, as I have said, we have about 36,000 new entrants into the labour market every year. So this will be the number of jobs thatneed tobe created to keep our unemployment rate as it is. This translates to about 3%-5% of GDP growth, using historical norms. In the first half of this year, we created about 27,000 jobs and the new jobs will exceed the number of new labour entrants. So unemployment will fall somewhat towards the end of the year.

rose ---

Mr Low, do catch my eye before you stand, please.

Have I caught your eye, Sir?

Sir, is the Minister projecting that the residential unemployment rate in the next five years is going to remain the same, 4.5%or 5%? Or is he saying that there will be a reduction in the unemployment

rate? What would bea stable unemployment rate that he would be satisfied with?

Sir, unemployment is a function of many things. But for Singaporeans, the most important question in their minds is: can our economy grow and create jobs? That is the fundamental issue. Ifwe cannot, then there are not enough jobs to go round. It is as simple as that. And it is very clear from the last five years that this is being demonstrated when the economy slumped. We could do almost everything and we did. And when there were external challenges like SARS or terrorism, we did not have growth, we did not have jobs. We did not do that much structural changes. We took hard decisions in terms of CPF, wage cuts, and this year, the economy grew and we are creating jobs. So I think in terms of job creation, our fundamentals are there. But the greater challenge for many of our Singaporean workers is that they can be left behind because their skills and aptitudes may not be quite consistent with the type of jobs being created. In other words, our new economic structure creates jobs. We must retrain and help Singaporeans adapt. If we can do that and can meet the challenge, then unemployment will go down.

Sir, the Minister has not answered my question as to what is the Ministry's projection of the residential unemployment rate in the next five years.

Sir, the current unemployment rate is 4.5%. What the unemployment rate will be, going forward, as I have said, is a function of many things. One is a function of growth because, ultimately, it is growth that creates jobs. And ifwe have another situation and there is no growth and there are, in fact, job losses, then our

unemployment rate will go up. But if our economy does well, as it has been doing this year, andwe create jobs, our unemployment rate should go down if workers have the skills to go into the jobs. If our economy continues to grow, as forecast by MTI this year, we expect the unemployment rate to go down to 4%.

How it does after that, again itdepends on how the economy grows and how our workers adapt to the challenges.

So, I think it is less useful to make forecast. It is really more impactful to get our workers ready for the jobs that will come when our economy grows.

Does the Ministry not have a forecast of the projection of unemployment rate, given the circumstances and projections of economic growth in the next five years?

Sir, our forecast is, if the economy grows by 3-5% per year, we will generate about 36,000 jobs to absorb the entrants. In other words, all things being equal, if we continue to grow 3-5% for the next five years, depending on what the unemployment rate at the end of the year is, it will be around 4%. If we grow more than 5%, the unemployment rate will fall. If we grow less, the unemployment rate will rise.

Sir, as the economy grows, will the unemployment rate actually go up as more of those who are unemployed, who have given up looking for jobs, return back to the job market to seek for new jobs?

Yes.

16. Dr Ong Seh Hong asked the Minister for National Development, in the light of the Prime Minister's announcement in making Singapore an elderly friendly environment, will his Ministry (a)

consider giving residents in those HDB flats which failed in the polling of the LUP (lift upgrading programme) a second chance to vote for the programme; and (b) consider extending LUP to low-rise flats.

Mr Speaker, Sir, the Lift Upgrading Programme (LUP) was introduced in 2001 to improve the accessibility and mobility of our elderly and disabled residents. HDB blocks are retrofitted with lift landings on every floor. All high-rise HDB blocks built before 1990 and without direct access to a lift are eligible for the LUP.

As the LUP is heavily subsidised and funds are limited, the blocks will have to be upgraded progressively. To-date, the LUP has been offered to more than 600 high-rise blocks. More than 3,000 high-rise blocks are currently eligible.

The LUP is the most popular of all HDB's upgrading programmes. We will therefore focus on lift upgrading and do what we can to bring LUP to as many households as quickly as possible, within the resources available.

Blocks which have been offered but failed to meet the 75% €˜Yes' vote requirement are technically still eligible for the LUP. However, as there are many requests for lift upgrading, we need to consider giving a higher priority to those blocks which have not yetbeen selected for the LUP before.

Similarly, the Government will continue to give priority to high-rise blocks, where more residents can benefit from the programme. Nevertheless, as more high-rise blocks get upgraded, we will consider extending the LUP to low-rise blocks at some stage.

May I ask the Minister whether there is an eligibility period for re-voting of LUP and whether he will give priority to cases where there are more disabled or elderly residents in a block and there is a high percentage of the residents of that block requesting for re-voting of LUP?

May I also ask the Minister whether such LUP projects will be costlier because, as they lose that priority, they will lose the economies of scale of larger projects as many of them will become stand-alone projects?

To answer the second question, as far as economies of scale are concerned, I do not think the Member need to fear that as we go along, the LUP project will become more expensive. There is no reason for her to have this concern. As I said, we still have a large number of blocks which are eligible for LUP. Therefore, I expectthe economies of scale will be with us for quite some time.

As far as priority is concerned, first of all, I think, as the Member is aware, it really depends on the nomination of the particular block or precinct coming from the adviser. So, if the adviser feels that certain blocks should be nominated, ie, should take priority over other blocks for whatever reasons -whether it is because there are more elderly in that precinct, whether it is because there is a particular need, or whether those lifts are especially old and therefore need upgrading -then obviously the Ministry will have to take that into consideration.

But I would like to remind the House that, ultimately, there is only a limited budget available for upgrading. First of all, there is a limited budget available to my Ministry. Within that budget, I have to allocate a certain budget for housing. Within the housing budget, I have to allocate a certain amount for upgrading

programmes. Within that, I have to allocate some money for lift upgrading versus other upgrading programmes. So, given the fact that resources are not unlimited, there has got to be prioritisation. We would have to be guided, to a large extent, by the Members' nomination. But, overall, having received all the nominations, we would then have to make another decision as far as priorities are concerned.

Sir, would the Minister not agree that for lift upgrading - for those who have just failed - there will be still some economies of scale when you can tack on the existing project? That would also cause less disruption to the precinct. Because, if you come back later to do stand-alone blocks, you may create the same amount of disruption.

Mynextquestion is this. I would like to ask the Minister what is the plan to complete the LUP for all eligible HDB flats in the whole of Singapore and what is his Ministry's plan to speed up the project.

My thirdquestion is whether the Ministry will consider this issue. AlthoughLUP adds on a certain facility,this facility is not within the unit. Should it not be considered more like an IUP rather than a MUP and it should not be a co-payment basis? The reason why I say that isthe people who need them most - the elderly families - are the ones who are most likely to be less willing to pay because many of them are retirees, the unemployed orlower-income families.

With regard to the first question, I think I have answered Dr Lily Neo just now. It is a question of prioritisation. It is not necessarily true that blocks which have failed to achieve the 75% 'Yes' vote are more economical to do than other blocks. In fact, there are

over 3,000 blocks in Singapore which arewaiting in the queue for lift upgrading. So, really, I should put this question to the Member. Within his own constituency, he has to decide which precinct has got greater priority in terms of lift upgrading - the one that has just been offered and failed to get the 75% 'Yes' vote, or some other precincts which are just as deserving, if not more so. I think this issomething which the Member ought to think about. It is not just a matter of economies of scale. As I explained, it does not necessarily follow that those blocks which have failed are more economical to upgrade.

As far as his second question is concerned which deals with ---

Would you like to repeat your question, Dr Ong?

My second point is, if you do it together, it causes less disruption to the area.

As I have said earlier, it does not follow that there is economy of scale when you are dealing with those blocks which have just failed. There are many other blocks which are just as deserving on that score.

The third question is concerning the issue of co-payment - why do we require co-payment for the lift upgrading? Over the years, before 1990 when HDB was building many flats, it built many different types of flats. There was the traditional slab block (with common corridor) and then, subsequently, it went into the segmented blocks where there was no common corridor but there was more privacy. People felt that they needed more privacy. But the problem with the segmented blocks is that the lifts do not actually stop on every floor. To provide lifts for all thesedifferent types of blocks is a veryexpensive exercise. As I indicated earlier, there is a limitedbudget for upgrading and within this upgrading

budget, we have to try and achieve as much as possible.

He asked how long it will take for us to complete. If you take the rate at which we are currently doing LUP, we have done about 600 blocks over the last three years, say, 200 per year. We have about 3,000 blocks left. So, a rough back of the envelope calculation, we will need another 15 years to complete, if we are able to do it at the same rate. We are now looking to see whether we canspeed up this rate of bringing the LUP to residents. Over the last few years, we have tried to skew the budget more in favour of lift upgrading as opposed to MUP. We have implemented a programme known as IUP-Plus where we have added the lift upgrading to the IUP programme; hence the "plus".Through all these measures, we hope that we will be able to speed up the lift upgrading. Because, as all Members of the House would attest, it is a very popular programme and it is definitely something which will become more and more necessary as our population ages. So that is something that we will be looking at actively.

But whatever it is, it is still a very expensive programme to do. And it is therefore very important for us to, first of all, be able to have some indication from residents whether they really want it or not. If we were to offer it as a programme which is free of charge, I think there is going to be a lot of pressure for us to do it all over the place, and I do not think the budget will be able to take it.

Secondly, through a process of co-payment, we will be able to actually speed up the programme faster because residents will be paying a certain part of the cost, although that cost will be kept to the minimum. The level of co-payment today, from the point of view of the residents, is, I would say, very reasonable. It ranges from 5-15%of the

cost. So the total cost, say, for a 3-room flat issomething like $2,000. So it is very reasonable.

He asked what happens to those who are not able to pay, the elderly residents, for example. Here, I would like to assure him that there are many schemes that are available for such residents, whether it is stretching of the payment to as long as 25 years, the use of CPF, and even the deferred payment scheme, if necessary, if the resident is really unable to pay.All these schemes are available to make sure that affordability for those who are genuinely in financial difficulty is not an issue. If they are able to get the 75% 'Yes' vote, then that should not be an issue.

17. Dr Teo Ho Pin asked the Minister for National Development (a) what are the reasons for the Main Upgrading Programmes at Pandan Gardens and Paya Lebar Way precincts failing to attain 75% support from their residents; (b) whether there areplans to review the Programmes; and (c) how many flats are presently eligible for upgrading programmes.

You have about half a minute left, Mr Mah.

Mr Speaker, Sir, last year, 68.8% of the residents in Pandan Gardens and this year, 71.4% of the residents in Paya Lebar Way voted in favour of the Main Upgrading Programme (MUP). As this falls short of the minimum 75% support required, HDB could not proceed with MUP for both precincts.

As for the reasons why some residents voted "No", feedback fromHDBsuggests that some residents in Pandan Gardens were worried about the uncertain economic environment and job securitylast year. In the case of Paya Lebar Way,

the feedback was that some households had already renovated their flats, while others thought that they would have to pay for the additional space-adding item even if they vote for the MUP Standard Package.

Since MUP was introduced in 1990, 110 precincts have successfully polled for the programme. More than 110,000 households have benefited, or will be benefiting, from the programme. Two precincts out of the 110 did not vote for it. Thisdoes not suggest that the programme needs a fundamental overhaul.

HDB regularly reviews the scope of its upgrading programmes to ensure that they remain relevant. For instance, in 2002, the MUP was revised to focus on functional items that give tangible benefits.The MUP is heavily subsidised, and the Government pays up to 90% of the cost.Certain MUP improvement works such as the multi-storey carparks (MSCPs) are fully funded by Government.

There are about 230,000 flats that are still eligible for the various upgrading programmes. We will continue to review the programmes to ensure that they remain relevant to the needs of HDB residents.

3.00 pm

Order. End of Question time.

[Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 24, 28, 33-34, 36, 41-42 and 44 on the Order Paper are reproduced in the Appendix*. Question Nos. 18-23, 25-27, 29-32, 35, 37-40 and 43 have been postponed to the sitting of Parliament on 2nd September 2004.]

*Cols. 449-460.

"to amend the Supreme Court of Judicature Act (Chapter 322 of the 1999 Revised Edition)",

presented by the Deputy Prime Minister and Minister for Law (Prof. S Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Land Surveyors Act (Chapter 156 of the 2002 Revised Edition) and to make related and consequential amendments to the Boundaries and Survey Maps Act (Chapter 25 of the 1999 Revised Edition), the Land Titles Act (Chapter 157 of the 2004 Revised Edition) and the Land Titles (Strata) Act (Chapter 158 of the 1999 Revised Edition)",

presented by Prof. Jayakumar; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Hire-Purchase Act (Chapter 125 of the 1999 Revised Edition)",

presented by the Minister for Trade and Industry (Mr Lim Hng Kiang); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Public Utilities Act (Chapter 261 of the 2002 Revised Edition)",

presented by the Minister for the Environment and Water Resources (Assoc. Prof. Dr Yaacob Ibrahim); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Nanyang Technological University Act (Chapter 192 of the 1992 Revised Edition) and the National University of Singapore Act (Chapter 204 of the 2002 Revised Edition)",

presented by the Second Minister for Education (Dr Ng Eng Hen); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Employment Act (Chapter 91 of the 1996 Revised Edition)",

presented by the Minister for Manpower (Dr Ng Eng Hen); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Children Development Co-Savings Act (Chapter 38A of the 2002 Revised Edition)",

recommendation of President signified; presented by the Acting Minister for Community Development, Youth and Sports (Dr Vivian Balakrishnan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read.

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

Sir, this Bill amends the Prisons Act to expand the Home Detention Scheme and to enhance the operational efficiency of the Singapore Prison Service.

Expansion of the Home Detention Scheme

The Home Detention Scheme was introduced in May 2000 toenable first-

time and minor offenders to return early to the community to be re-united with their families and be gainfully employed. It also helps tominimise the risk of first-time and minor offenders from being influenced by hardened criminals whilst in prison.

The present Home Detention Scheme was first implemented in May 2000. From May 2000 to the end of June 2004, about 4,074 inmates were emplaced on home detention.99.3% of the inmates successfully completed the programme. Only 30 failed tocomplete the programme. Given the success of the Home Detention Scheme, the Ministry of Home Affairsintends to expand the scheme to allow more inmates, especially first-time and minor offenders with short sentences, to benefit from it. Assuming that the prison admissions remain the same, as for the last two years, about 4,000 inmates would be put on home detention under the expanded scheme.

Currently, suitable inmates who are sentenced to not less thansix months' imprisonment and who have served at least half of their sentences in prisons will be considered for emplacement on home detention foraperiod ofup to six months. Clause 17 of the Bill will amend section 53 to expand the Home Detention Scheme such that suitable inmates who are sentenced to not less thanfour weeks of imprisonment and have served at least 14 days of their sentences in prisons can be considered for emplacement on home detention. Clause 16 of the Bill will amend section 52 of the Prisons Act to raise the maximum home detention period from 6to 12 months.

Inmates with sentences of more thanone month and of good behaviour are currently granted remission equivalent to one third of their sentence, subject to the inmates serving a minimum period ofone month in prison. Those sentenced toone month or less are currently not eligible for

remission. With the expansion of the Home Detention Scheme, inmates who are sentenced to more than 14 days of imprisonment and of good behaviour will be granted one-third remission of their sentences, subject to the inmates serving a minimum period of 14 days in prison. For example, an inmate who is sentenced to 21 days of imprisonment will now be grantedseven days remission of his sentence and will serve 14 days of his sentence. Prisons Regulation 118(1) will be amended to reflect this change.

Sir, currently, the Schedule to the Prisons Act sets out the offences for which a person who has been convicted will not qualify for home detention. This ensures that inmates convicted of serious and violent crimes are not released on home detention. The Ministrywill retain the Schedule. However, clause 17 of the Bill inserts a provision in the Act to allow the Minister the discretion to release deserving inmates convicted of offences in the Schedule on home detention. Prison's experience is that there are such deserving cases. But let me assure the House that this discretion will be exercised judiciously and sparingly, taking into account the inmate's progress and response to rehabilitation in prison, the inmate's level of family support and the risk of recidivism by the inmate.

Other amendments to the Prisons Act

Sir, I will now move on to the other amendments to the Prisons Act.

Pre-emptive removal of prisoners

The Minister is currently empowered to remove prisoners to another place when there is an infectious disease outbreak in prisons. Learning from our experience with SARS, the Ministryis proposing to provide for the pre-emptive removal of prisoners when there is a threat of an outbreak occurring in prisons.

Other amendments - delegation of powers

In addition, we have taken the opportunity to streamline the delegation of certain powers under the Act for greater administrative and operational efficiency.

Specifically, clause 5 of the Bill repeals and re-enacts section 25 to allow the Director of Prisons to appoint medical officers for prisons. It is administratively easier to empower the Director of Prisons to appoint the medical officers since the Director of Prisons will be the one entering into a contract with the medical service provider.

Clause 11 of the Bill amends section 39 to allow the Director of Prisons to produce prisoners in the interest of justice, such as when a remand prisoner is required by the court to be brought to the scene of crime when the presiding judge, prosecution or defence wishes to learn more about certain aspects of the case. For operational efficiency, this power will be delegated from the Minister to the Director of Prisons.

Clause 12 of the Bill amends section 42 to empower the Director of Prisons to order the removal of any prisoner if a threat of infectious disease occurs in the prisons. In a case of emergency such as during a SARS outbreak and where the Director of Prisons is absent or unable to make such order for removal, the order may be made by the Superintendent of the prison concerned or bythe Visiting Justices. Clause 13 of the Bill amends section 43 to allow the Director of Prisons to remove prisoners of unsound mind to any mental hospital or other fit place for safe custody within Singapore.

A provision will also be included in the Prisons Act for the Director of Prisons to delegate his powers to the Deputy Director of Prisons where necessary. This is a common provision in other Acts, such as the Police Force Act, the Civil Defence

Act and the Immigration Act. This amendment will make the provisions of the Prisons Act consistent with these other Acts. Specifically, clause 4 of the Bill amends section 20 to provide for the Deputy Director of Prisons to exercise and perform all or any of the powers, duties and functions of the Director of Prisons. This is critical in operational work for it empowers the Deputy Director to make certain decisions and take certain actions when the situation requires him to. For example, in a fire or riot situation in prison, where there may be a threat to life and limb, the Deputy Director may need to remove prisoners from the affected prisons to a place of safety.

Other minor amendments are also being made to the Prisons Act to allow for better administration of the Act.

Conclusion

Mr Speaker, Sir, the amendments to the Prisons Act

that I have presented today will allow more inmates to benefit from the Home Detention Scheme, and for our prisons to function more effectively.

Sir, I beg to move.

Question proposed.

Sir, I rise to speak in support of the Bill and would like to focus on the amendments to the Home Detention Scheme as mentioned by the Minister.

Traditionalists hold the view that home detention is not really a form of punishment. After all, the inmate is allowed all the comforts of home, and the effect of them having committed a crime and sentenced to a custodial sentence may be lost. So, the first question that I would like to ask the Minister is: how is the point driven home that this is still a custodial sentence and that the person

put on home detention has still committed a crime and is properly punished?

The second concern is one that is expressed by some that the extension of the Home Detention Scheme is a means of reducing overcrowding in prisons, and that there is this hidden agenda that, actually, we have overcrowded prisons and, therefore, we extend the Home Detention Scheme. Sir, I would like to ask the Minister whether this is really the case and, if not, to tell the public that home detention is really a measure which would serve the interests of society.

Thirdly, there isthe reformists' view that holds thathome detention is a good thing, that it will shield first-time offenders from experienced offenders who are incarcerated in high security prisons and so on.

So, is there a move towards a more front-end type of home detention, ie, would the courts, for example, be allowed in appropriate cases to sentence a first-time offender or minor offenders immediately to home detention rather than going through a period of incarceration?

Finally, it is a concern that neighbours may face when somebody is placed on home detention. They may have a suspicion whethera person who is under home detention being allowed out before his time would be subject to close scrutiny. Would he have the opportunity to perhaps commit more crimes while he is out on home detention?

These are some of the concerns about home detention. They go in different directions. So, I hope the Minister can clarify as to which way we are headed towards in terms of penal policy.

With those comments, Sir, I support the Bill.

Mr Speaker, Sir, the proposed amendments to the Prisons Act are to be welcomed. This Bill proposes to amend, inter alia, section 53 which deals with the Home Detention Scheme by increasing the maximum period that may be served under home detention by reducing the minimum sentence of imprisonment imposed for a prisoner to be eligible for home detention by reducing the minimum term of imprisonment to be served before a prisoner is eligible for home detention, and by enabling the Minister to remove the disqualification of a prisoner under section 53 for home detention if he considers the prisoner deserving of home detention in the circumstances.

Hopefully, Sir, through the proposed amendments, the large number of select imprisoned citizens would be given an opportunity to be released and be with their families whilst serving sentence under the Home Detention Scheme. Our sentencing regime in the 21st century and in the 1990s, as compared to the 1970s and 1980s, has been very strict and deterrent-minded. It may serve its purpose. However, Sir, it may be worthwhile and timely for the authorities, the courts, the legal fraternity, including the Attorney-General's Chambers, the Ministry of Law, the Law Faculty of the National University of Singapore, the Law Society of Singapore and people involved in the administration of criminal justice in Singapore to revisit, review and decide anew what is the best approach to adopt in the criminal sentencing system. It should involve a balance between rehabilitation, reformation, deterrence and retribution form of sentencing of convicted accused persons. Where possible, Sir, we should avoid or minimise criminalising our citizens, and avoid sending too many of them to prison, except for serious and deserving cases.

With that, Sir, I do support this Bill.

Mr Speaker, Sir, this amendment allows the Director of Prisons to release an inmate for home detention for a period not exceeding one year,from the current limit of six months. The prisons administration can also allow an inmate to be placed on home detention if his sentence is at least four weeks long and he has served at least 14 days of his sentence.This means that a person who is convicted ofa jail term of one year may in fact only serve 14 days in prison, then he is out of jail to serve the rest of the sentence at home.

Sir, I do agree that home detention is a good sentencing option for offenders who are not dangerous. The question is whether such an administrative measure would undermine the intention of this House which fixes the sentence, and the intention of the judge when he passes sentence based on the severity of the offence. If we say that 12 months in prison is an appropriate punishment for a specific offence, will serving 14 days in jail and the rest at home render the sentence a formality and will the sentence lose its deterrent effect?

On the other hand, are we giving the prison authority too much discretion to treat offenders differently? Are we prudent in giving the prison authority such powers to decide and, in fact, to amend the punishment meted out by the courts?

Sir, it seems to me that, if the Prisons Department would like more people on home detention and for a longer time, it could be their assessment that many of these inmates under their care do not need to remain in jail for that long. Does this mean that our laws are too harsh and the punishments or sentencing benchmarks are, in actual fact, disproportionate to the offences committed? If this is the case, should we not review the laws? Instead of working backwards through administrative release, why not legislate

home detention as an option for the sentencing judge so that there can be more transparency in the system, instead of just leaving it to the prisons to decide?

Sir, I thank the Members for supporting the Bill and also raising the questions so that clarifications can be made.

Indeed, we need to have all the stakeholders of the criminal justice system to take a close look at the various sentencing options. Thoseinvolved are not just thestakeholders of the criminal justice system but also the community at large, and that we need to balance the need to send a deterrence to those who committed offences and the need to re-integrate theminto our society and become useful citizens again. That is why when we first introduced home detention in 2000, I said we indeed had a committee to look at this and thoseinvolvedwere not just the Ministry of Home Affairs but alsothe Ministry of Law,the Attorney-General's Chambers. We also sought the views of the courts, plus others who might have an interest in this.

The committee chaired by the Senior Minister of State for Home Affairs, Prof. Ho Peng Kee, came to the conclusion that we need to have several sentencing options available to the judges, and community-based sentencing is one of them, and the Home Detention Scheme is part of the community-based sentencing. The amendment to the Prisons Act at that time allowed for the release of prisoners on home detention. An advisory committee chaired by prominent citizens, in particular, Justices of the Peace and other prominent individuals was formedto make recommendations to the authority. The inmates were then released, subject to certain conditions.

So, let me assure the House that when we implemented the scheme, we

thought through very carefully the need to ensure providing a deterrent or retribution aspect to persons committing an offenceand his need to be rehabilitated and re-integrated into society, as well as the interests of the community to enjoy a safe environment within their own community. It is not a measure to reduce overcrowding, as suggested by Prof. Chin, because prison overcrowding is not a serious issue, although we do have prison crowding for the time being. But when the new prisons are ready, we will relieve a significant part of the overcrowding.

Looking at the number of prisoners we have at any one timeand the number of prisoners or inmates who are on home detention, the number of those on home detention wasa very significant number. We have only about 1,000 or 1,500 on average a year who were on home detention compared to the several more thousands who weresent to prison. So, let me assure the House that this is not a cost-cutting measure.

The Home Detention Scheme is not an invention by Singapore. It is something that is alreadyimplemented in other societies. Wemade a serious study of the scheme in other countries before embarking on it. The Home Detention Scheme is practised also in the United Kingdom, Australia as well as in Sweden, and we borrowed apage from their criminal law book.

The question by Mr Low Thia Khiang about a person being sentenced to one year in prison and would serve only a minimum period of 14 days is a misunderstanding. A person who is sentenced to one year will serve many more than 14 days in prison. In the first place, because he is sentenced to one year, he will have one third of his time for remission, meaning that he will have toserve a minimum of eight months in prison, of which half could be served at home, ie, four months at home and not

14 days, and four months are a significant period.During the period of home detention, he would be put on an electronic tag. He would be subject to curfew hours within his home, but he would be allowed to workoutside the curfew hours, which are normally between 7.00 am and 7.00 pm, and thereafter he has to remain at home. Therefore, there is no cause for his neighbours to worry that he isnot being under watch. If he is up to mischief and breaches the conditions for home detention, he would be sent back to prison. The fact thatonly 30 out of the 4,074 inmates who were placed on home detentionhad to be recalled shows that the scheme has been highly successful. Of course, we have to continue to watch this to make sure that the right kind ofinmates are selected, and the kind of inmates selected are the ones with minor offences or first-timers, and they do not fit into the schedule of offenders who are ineligible for the scheme.So, when a person is sentenced to a long jail sentence and the offenceis subject to the disqualification scheduleofserious crimes, he would not be released on home detention, so he would not make a mockery of the deterrent effect of the sentence. The objectiveof home detention is not to undermine the powers of the court or the intention of this House to subjectoffenders to deterrent sentences. Even though it is the prisons that decide on this instead of the court, we do this quite cautiously.

We had thought of letting thecourt to decide on sentencinga person to home detention. But, having consulted the courts, it is better that we make sure theoffender serves a period in prison before he is let off on home detention, because we believe that there is a salutary effect of serving a prison sentence. A person who commits an offence, however minor it is, ought to know that there is a price to

be paid for it and therefore he should serve a period. Before this amendment,prison sentences of less than six months are not eligible for home detention. We thought there is some need to adjust this to enable the group that has minor offences to be allowed to be put on home detention. Hence, wereduced this period to

14 days.

I believe I have dealt with the key issues raised by the Members. Let me assure the House that in selecting individual inmates, it is not at the whims and fancies of the prison officers. As I have said, there is already an advisory committee. With the scheme beingexpanded, we are going to have three more advisory committees to advise the prison authorities on theinmates who are suitable to be emplaced on home detention. The chairman andvice-chairmen of these committees are Justices of the Peace. In fact, among them is one of our Members of the House,Mrs Fang Ai Lian. I am sure that the committee members know full well their task, ie, to ensure that these inmates who are amenable to change are allowed an opportunity to change and, at the same time, we do not subject the communityto extra risk.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Mr Wong Kan Seng].

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

Order for Second Reading read.

3.34 pm

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

The purpose of the Business Trusts Bill is to introduce a framework for the governance of business trusts. Business trusts are business enterprises structured as trusts. They are an alternative to companies as a business structure. This structure is already used in other jurisdictions such as Australia, Canada and theUnited States.

Business trusts are distinct from both companies and traditional trusts – with similarities and differences from both. Like a company, a business trust operates and runs a business enterprise. But unlike a company, a business trust is not a separate legal entity. It is created by a trust deed under which the trustee has legal ownership of the trust assets and manages the assets for the benefit of the beneficiaries of the trust. However, a business trust differs from traditional trusts – such as private trusts and unit trusts – in that it is running and operating a business enterprise.

There have been indications of interest on the part of the industry in setting up business trusts. Whereas companies are restricted to paying dividends out of accounting profits, there are no such restrictions on trusts. Business trusts can therefore pay distributions to investors out of operating cash flows. The structure is thus suited to businesses involving high initial capital expenditure with stable operating cash flows, such as infrastructure businesses.

Investors can invest in the underlying business by subscribing for units in the business trust, in a manner similar to investing in shares in a company. The units can be listed on a securities exchange. Introducing the business trust

structure inSingapore will therefore create a new asset class for investors, and potentially add depth and sophistication to Singapore'scapital markets.

To allow business trusts to be offered to retail investors, it is necessary to establish a regulatory framework for the governance of business trusts.

The Business Trusts Bill is formulated with two objectives in mind:

First, to safeguard the rights of investors or unitholders in the business trust; and

Second, to establish the duties and accountability of the trustee-manager of a business trust and its directors, ie, the directors of the trustee-manager.

MAS has conducted public consultation on the regulatory framework and draft Bill. There has been broad support for the proposed legislation. MAS has considered the comments received in drafting the present Bill, made certain amendments in response to the comments and published its responses to the comments received.

Mr Speaker, Sir, I will now go through the key provisions of the Business Trusts Bill.

Registration under the Business Trusts Bill

The Business Trusts Bill sets out the requirements for the governance of business trusts registered under the Bill. The Securities and Futures (Amendment) Bill will make it mandatory for business trusts offered to the retail public to be registered under the Business Trusts Bill. Other business trusts, such as those offered to accreditedand institutionalinvestors will not require registration under the Bill. This is because such investors are generally better able to

protect their own interests. Such business trusts may however be voluntarily registered under the Bill where, for instance, the offeror considers that the investors targeted prefer to have the assurance that the business trust is one which is registered under the Bill. Business trusts which are not registered under the Bill will continue to be subject to the Trustees Act, which sets out the general obligations of trustees.

Single responsible entity

The Bill requires that the business trust be run by a single responsible entity known as the trustee-manager. The trustee-manager must be incorporated in Singapore. The trustee-manager has the dual responsibility of safeguarding the interests of unitholders and managing the business of the business trust.

This requirement ensures that fiduciary responsibility towards unitholders of a business trust is clearly placed on a single entity. The alternative would be a bifurcated structure, involving a manager of the business trust and a separateindependent trustee. However, the running of a business trust involves management of an operating business and the making of business decisions on a day-to-day basis. It would be difficult for an independent trustee to oversee the manager's business decisions. It would also be impracticable for a separate trustee to set out an operating mandate for the manager, without fettering the manager's ability to run the business as an operating enterprise. More importantly, it would be difficult to apportion liability for breaches of trust between the trustee and the manager. Adopting the single responsible entity model avoids this problem. This was the approach taken in Australia, in response to a number of cases in which the Court found difficulty

in apportioning liability between the trustee and the manager.

Accountability of the trustee-manager and its directors

The trustee-manager, as a company, would be owned by shareholders. It would typically be controlled by the sponsoring entity which had divested its business by setting up the business trust. The trustee-manager and its board of directors have a fiduciary duty to manage the trustee-management company in the best interests of the company and its shareholders. At the same time, however, as a trustee, the trustee-manager has an additional group of constituents whose interests must be safeguarded, namely, the unitholders of the business trust. The trustee-manager and its board of directors owe a duty to unitholders of the business trust to manage the business trust in the best interests of the unitholders. There is therefore potential for divergence between the interests of the trustee-manager and its shareholders, and the interests of unitholders. This may result in a conflict of duties on the part of the trustee-manager. For instance, the trustee-manager may wish to maximise management fees or may have less interest in minimising operating expenses which are paid to the trustee-manager out of the assets of the business trust. To cite another example, the controlling shareholder of the trustee-manager may influence the operations of the trust or engage in related party transactions that benefit the shareholder, to the detriment of unitholders of the business trust.

To address such potential conflicts of interests, the Business Trusts Bill sets out the duties and accountability of the trustee-manager and its directors.

Duties of the trustee-manager and its directors

The Business Trusts Bill imposes a duty on the trustee-manager to act in the

best interests of unitholders and to give priority to the interests of unitholders where these conflict with the trustee-manager's own interests.

The Bill also imposes a duty on the individual directors of a trustee-manager to take all reasonable steps to ensure that the trustee-manager discharges its duties towards unitholders. Directors also have a duty to give priority to the interests of unitholders where these conflict with the trustee-manager's own interests. This makes the directors of the trustee-manager responsible for safeguarding unitholder interests.

Annual certification by the board and the Chief Executive Officer of the trustee-manager

The Business Trusts Bill requires that the board of directors and the Chief Executive Officer ("CEO") of the trustee-manager each provide annual certification on specific issues relating to the governance of the trustee-manager. In particular, they are required to certify whether they are aware of any violation of duties of the trustee-manager which would have a materially adverse effect on the operations of the business trust and the interests of unitholders. Where the board or the CEO is unable to make such a certification, the reasons should be disclosed to unitholders.

This certification requirement is intended to make the board and CEO of the trustee-manager acutely aware of their responsibility to safeguard the interests of unitholders of the business trust.

Board composition of the trustee-manager

The Business Trusts Bill provides MAS the power to prescribe requirements on the composition of the board of the trustee-manager. MAS intends to require the board of directors of the trustee-manager to have a strong element of

independence to protect the interests of unitholders. The test of independence will be based on three criteria, independence from management of the trustee-manager, independence from substantial shareholders of the trustee-manager, and independence from business relations with the trustee-manager. The details will be set out in the Regulations.

Audit committees

In addition, the trustee-manager will be required to establish an audit committee. The Bill provides MAS with the power to prescribe the composition and duties of the audit committee. MAS intends to require in Regulations that the audit committee has a strong element of independence. We also intend to require that the audit committee review the governance policies and practices applied by the trustee-manager in operating the business trust. This provides a further mechanism to ensure that the interests of unitholders are objectively considered by the board.

Setting out the rights of unitholders

The Business Trusts Bill sets out the rights of unitholders. I will highlight the key provisions.

Limited liability of unitholders

The Business Trusts Bill provides that a unitholder's liability is limited to the sum of money which he has expressly agreed to contribute to the business trust. Under common law, unitholders may be exposed to unlimited liability for the obligations of the trust. The Bill provides certainty and protection to unitholders by limiting their liability and puts them in an equivalent position to shareholders of companies.

Change of trustee-manager and trust deed

One of the fundamental rights of unitholders is the right to vote to remove the trustee-manager where the trustee-

manager is unable or unwilling to fulfil its obligations to unitholders.

The Bill requires that the removal of the trustee-manager be subject to a special resolution of unitholders – that is, it must be approved by 75% of unitholders voting in presence or by proxy. Removal of the trustee-manager may adversely impact the continuity of operations of the business trust. The 75% threshold balances the need to guard against the frivolous removal of a trustee-manager with the need to provide sufficient rights to unitholders to remove an inept or poorly functioning trustee-manager.

Unitholders have the right to vote on amendments to the trust deed. The trust deed is analogous to a contract between the trustee-manager and the unitholders. The Bill requires that amendments to the trust deed must be approved by a special resolution of the unitholders. This voting threshold for amending the trust deed is consistent with the approval threshold for amendments to the memorandum and articles of a company by shareholders in the Companies Act. As an exception, the trustee-manager may amend the trust deed without unitholders' approval where such amendments to the trust deed are necessary to comply with any laws in Singapore.

Civil liability

The Business Trusts Bill provides for any unitholder who suffers loss or damage because of any conduct of the trustee-manager to take civil action against the trustee-manager. Also, any unitholder may apply to the court for an order in the case of oppression arising from the conduct of the affairs of the business trust, or for leave to bring a derivative or representative action on behalf of all unitholders of the business trust.

Conclusion

To conclude, the business trust structure provides an alternative business structure to companies, particularly for businesses with stable growth and operating cash flow. Introducing this new structure inSingapore will allow for a new asset class for investors and potentially add to the development of our capital markets. At the same time, there must be appropriate safeguards of the interests of retail investors investing in business trusts. The Business Trusts Bill puts in place a governance framework for business trusts, to protect the fundamental rights of unitholders and to set out the duties and accountability of the trustee-manager and its directors.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, thank you for allowing me to speak on the Business Trusts Bill. As a lawyer in private practice, I advise clients on corporate and commercial law and welcome the introduction of any new mechanism such as business trusts to help companies raise funds for their business needs. I, therefore, support the Business Trusts Bill.

The business trusts structure is particularly well-suited for businesses with stable revenue and high cash flows with minimal on-going capital expenditure requirements. As most banks in Asia tend to lend against physical assets and have displayed reluctance to lend against cash flow, the Business Trust is a good alternative vehicle for steady cash flow low asset companies to attract funding.

Recently, Iwas cited an instance of a business that had a resilient cash flow of $700,000 a year but could not find a bank to finance it as it had little by way of hard assets, that is, real estate.Business

trusts may be a viable option for such companies. Further, mature businesses that offer limited capital gains potential have a better chance to get a higher valuation throughbusiness trusts than an equity offering. For the unitholders of the trust, they would benefit from regular distribution out of net cash profits as opposed to accounting profits. However, notwithstanding these benefits, I wonder whether business trusts, in the form envisaged in the Bill, would be attractive enough for our local investment community. I would like to raise three specific points on the provisions of this Bill.

First, the Business Trusts Bill requires the business ofbusiness trusts to be run by a single responsible entity known as the trustee-manager who would have the dual responsibility of safeguarding the interest of unitholders, as well as managing the business trust. Although this combined role addresses the difficulty of apportioningfiduciary responsibility between trustee and manager, the people I spoke to, who are already in the trusts industry, are reluctant to be trustee-manager because they have no expertise running active business enterprises and the additional liabilities of having to manage the business are onerous. Therefore, it seems that the trustee- manager would probably be made up of people who are managing the operations, who now have no choice but to accept the additional responsibility of a trustee of the assets if they want to set up a business trust. But would these managers be so pre-occupied running the business that they sacrifice the interest of the unitholders? How qualified and competent would they be to act as trustees and discharge their duties to safeguard the interest of the unitholders?

Sir, this leads me to my second point which is about compliance cost. To protect the interest of unitholders, the Business Trusts Bill makes it mandatory

that trustees-managers have on board independent directors and an audit committee to serve as a check and to ensure that the interest of unitholders are objectively considered. But these independent persons would require to be adequately compensated for assuming and discharging these onerous responsibilities. Moreover, the trustee-manager must be a public company incorporated in Singapore and could only run one business trust at any one time. This will result in additional expenses. Sir, larger and more established businesses already have a multitude of options to raise funds from the capital markets, such as public offering and public listing of their shares and issuing corporate bonds, notes and other commercial papers. For small businesses, the extra expenses associated with such mandatory requirements may prove to be prohibitively high.

While protection of unitholders should not be compromised, I believe every effort must be made to keep cost to the lowest possible minimum without sacrificing the quality of the safeguards. The cost of setting up and maintaining a business trust should not be so high that it becomes unattractive compared to other more economical alternative structures. For example, for smaller companies, venture capitalists are familiar with redeemable convertible cumulative preference shares. This is an extremely flexible and established instrument that is widely adopted by companies to obtain funding. These redeemable convertible cumulative preference shares could provide for redemption of the invested amount under certain conditions, payment of preferential cumulative dividends, conversion to equity ordinary shares and preferential rights in the event of distribution of assets, thus giving them quasi-loan and quasi-equity elements. Hence, the funding difficulties faced by small companies may not actually be due

to a lack of viable or conducive investment structure alone and the introduction of business trusts may not address the difficulties of attracting investors' interest in the first place. Sir, if private investors and venture funds are keen to invest in a particular business, there are already existing funding mechanisms for them to make and protect their investment.

Sir, my third point relates to third parties dealing with the business trust. It is envisaged that the business trust be structured in the form of trusts with no separate legal existence. As the trustee-manager has legal ownership of the assets of the business enterprise and manages the business, creditors could only claim against the assets of the business trusts via the rights of indemnity of the trustee-manager, provided the trustee-manager has acted properly in incurring the liability. It would be cumbersome, impractical and probably impossible for creditors acting in good faith to conduct checks on whether the trustee-manager is acting properly for every single transaction entered into. This differs from the situation of a company and creditors dealing with a business trust would not have the same level of protection as creditors dealing witha company. Consequently,there is a need for potential creditors and people who intend to transact with the business trust to be educated on its structure, the inherent risks involved and their rights as creditors and counter-parties.

Sir, to conclude, there is a need to continually create new asset classesfor investors and add more breadth, depth and sophistication to our capital markets and business trustsare one such additional asset class. However, to strengthen our capital markets, we should also continue to promote the traditional investment instrumentslike stocks, bonds

and other debt securities. I am told that following the Asian financial crisis, when financial institutions in Thailand were cash-strapped, the Thai government and corporations went directly to the market to raise funds by issuing bonds. This resulted in the Thai bond market taking off and growing rapidly. I would like to ask the Minister what steps would be taken to increase the market size and trading volume of listed bonds and, ata later stage, listed business trusts on our local market.

On that note, Sir, I support the Bill.

Sir, ever since when I was doing my post-graduate studies in accountancy, trusts have been a popular subject. Then it was a popular vehicle not only for wealthy families to manage their wealth to ensure a smooth transition to future generations, but has also been used to manage family businesses while the owners of the wealth are still alive. Trusts have also been used by business partners, especially professionals such as doctors and accountants, who wish to separate their personal assets from their professional services in order to reduce exposure to heavy taxes and other potential liabilities.

Besides being a useful vehicle for tax and estate planning purposes, a trust in whatever form has its downside in that it has to be managed by a trustee, whom the settlor and the beneficiaries could depend on managing the trust. However, I am happy that Singapore would now have trusts that are actively engaged in business to be registered as business trusts and operate within its own legal framework. It could also raise funds from the public and act like a public-listed company. This would add depth to our capital market and clearly enhance the sophistication of our financial market.

On the subject of trustee-manager, clause 6 states that the trustee-manager

is to be a company that does not carry on any other business other than managing the affairs of the business trust. Clauses 7 to 17 spell out its powers and responsibilities. However, could the Minister comment on how much should the trustee-manager be capitalised as well as its net worth before it is being allowed to act? This point is important as the trustee-manager couldbe penalised on many potential lapses of duties, as well as having to carry on a heavy load of expenses such as professional directors and audit committee members. Its fiduciary duties also open it to potential professional negligence and its cost of corporate governance would be high. There could be times when the risks-to-reward ratio ofa trustee-manager may not be that attractive enough to attract the right skills in managing the business trusts. Hence, a trustee-manager, I presume,has to be a company of good financial standing. Furthermore, the trustee-manager should be well-positioned financially to absorb high penalties. For example, clause 12(1) and (5) relatesto the duties of directors or trustee-managers to disclose interest in transactions or when holding any office or possess any property which might be in conflict with their duties. Such lapse in declaration could be innocentlyleft out in these days of complex business transactions, but without any damage to the business or the business trusts as well, but the directors may still be found guilty with a possible fine of up to $100,000 or to imprisonment for a term of not more than two years or both. On top of this, a further fine of $10,000 for each day such offence continues after conviction may be imposed although, in such cases, a fine is necessary and sufficient warning has been given.

Business trusts, like any form of trusts, have to contend with beneficiaries who are not satisfied with the way a business is run by the trustee-manager or are in dispute withfellowbeneficiaries.

Such disputes may escalate and one party or parties that have a lot to lose may appeal to the Minister andAdvisory Committee and an Appeal Advisory Panel may be appointed to deal with these matters as provided for inclauses 88 to 91. May I find out from the Minister whether such Committee and Panel Memberswould be made known to the business trusts so as to provide transparency and confidence to the public?

Business trusts are on-going businesses and, as such, would have credit lines with their suppliers. In normal circumstances, trusteesare responsible for any debt incurred by the trusts and, in this case, under the business trusts, it is the same practice. However, business trusts may be listed as public companies and are larger than, say, a typical familytrust, and suppliers are exposed togreater financial risks. May I ask the Minister whether the creditors of business trusts have any rights that are better than any other trusts? As far as I know, creditors could only claim from the assets of the business trusts via the rights of indemnity of the trustee-manager, as my colleague has pointed out. As such, creditors may not want to do business with business trusts under the current level of protection that the Bill accords. However, looking at the opportunities offered, business trusts are interesting new models from which businesses could operate from and it provides a good avenue from which wealth could be created and protected. With somecreative financial planning, business trusts could be a good vehicle for wealth to be managed properly for generations to come.

Mr Speaker, Sir, I support the Business Trusts Bill.

Mr Speaker,I would also like to support the Business Trusts Bill. This introduces a new regulatory framework for business

trusts which is a new class of business entity that combines the elements of companies and trusts.

As the Minister had said, this is already in operation in other countries, so it is good to see it taking root in Singapore, and it would add to the sophistication of the capital markets and also enhance our position as one of the world's leading financial centres. I am sure it would definitely bring cheer to the market place.

I remember some years back, the bankers were complaining about the gloom and doom, off-shore banks were moving out and operations were run down and the fact that we were not able to attract the newer and more value-added activities such as assetsand risks managements to Singapore as much as we would like. All that has changed, especiallywith the liberalisation of the domestic banking business and, indeed, this has prompted Citibank to announce a $1.5 billion investment into Singapore in Citibank Singapore. Offshore business banks are coming back and also beefing up their operations and indeed, thePrime Minister, in his National Day Rally speech, said that the financial services sector is hotting up again. Indeed they are hiring in bigger numbers now, much to the consternation of businesses like ours who have got to queue behind them, but we are not exactly complaining.

So a lot had been done in terms of stimulating the banking and financial services centre. There is still a wish-list and one relates to what bankers described as antiquated trust laws, especially relating to the traditional trust laws, for example, MrAndy Gan had said the private family trust laws. There had been a consultation paper which had been widely distributed and it has been rumoured that legislation would be

introduced towards the end of the year. This is important. Bankers are looking towards the updating of these laws which have not been revised significantly because it would help to attract the funds, especially from Europe, which are seeking alternative financial centres because of changes in banking laws there. So whilst we await a revision to the legislation relating to the traditional trusts,

the introduction of business trusts is indeed very welcome. Asthe Minister hassaid, business trust is a new form of trust. It is regular business and yet not regular business, because it is established under a trust deed and not under the Companies Act. And as he has said, it is well suited for businesses which have stable growth and stable cash flow because distributions are from the cash flow. It will also be suitedfor the strategic industries like power generation. The ownership can vest with the Government but the operations can be privatised.

Business trustswill add to the sophistication of the market place and I see it as a natural development fromReal Estate Investment Trusts (REITs), which were introduced some two years ago. REITs are managed under the collective investment scheme under the Securities and Futures Act (SFA). Withthe collective investment scheme (CIS)under the SFA and with further amendments to the SFA, businesses can choose between CIS and business trusts.

REITs, introduced some two years ago, have been fairly successful. We now have four. We are first movers in this game and it has caused our neighbours to think likewise. And the speed with which they introduced REITs is quite phenomenal. In Hong Kong, their consultation paper came out in March 2003 and the final version came out in July. And Malaysia also introduced REITs into their budget and also exempted stamp duty from properties injected into REITs. So,

we have the first mover advantage andwe are alsoquite lucky that these countries have not launched any REIT. My comment here is that the first mover advantage can be very quickly eroded if we do not take advantage of it by attracting more REITs and creating the critical mass and building up the industry here.

Soalso withbusiness trusts.They will add to the sophistication and depth of our capital markets and, more importantly, entrench our position as a progressive financial services centre. Because it has been said that it adds a new class of yield-based financial products for investors in Singapore as well as overseas. If we see the success of REITs, it has really changed in a very positive way how properties are managed. Every square foot of space is being maximised. We see Junction 8,Funan Centre and shopping malls being very vibrant. So it is with business trusts that businesses can see very positive changes.

One of the reasons why REITs have been so successful is perhaps due to the fact that it is able to enjoy a transparency treatment for tax. The tax is levied at the level of the unitholder. So if you are a corporate unitholder, you get taxed at the corporate rate and if you are an individual, it is tax exempt. So this makes REITs very attractive because you can quote gross yield instead of net of tax yield. And this has helped to move this business.

I have awish list for theMinister. Itis forbusiness trust to be similarly accorded the transparency treatment of tax to make it attractive and to make it viable. One worrycould be that there might be tax leakage because you enjoy a better tax collection under the one-tier system, and that there might also be a possible abuse by smaller companies using the business trust structure. Perhaps one way of getting round this problemis to accord

transparency treatmentto the bigger trusts whichare to be listedon the stock exchange. So, the long and short of it all, my wish list for theMinister is, first,for the laws relating to traditional trusts to be speeded up.

Second, being the first mover, we have been very goodin a lot of the activities. People copy us and that is the sincerest form of flattery. We could perhaps take the offensive and copy those who copy us, and that is in relation to stamp duty. Perhapsstamp dutycould also be removed in terms of properties that are injected into trusts.

Thirdly, I would like to talk about the transparency treatment and that should also be accorded to business trusts. Because ifit is absent, then it will be the best equivalent to the companies enjoying other tax benefits and incentives, andit will alsobe equal to Hong Kong and behind Malaysia.

With the wish list and with the legislation in place,the Government could clearly say that they have done their best to pave the way for business trusts and then it is up to the business community to take it from there.

Mr Speaker, Sir, I would like to thank Mr Ong Kian Min, Mr Andy Gan and Mrs Fang Ai Lian for their very useful comments and their support for the Business Trusts Bill, both for the flexibility that it offers to businesses in providing anew business structure that they can employ and also because it potentially adds depth and sophistication to our capital markets.

Mr Ong Kian Min highlighted a very important feature -I should say the key feature of the Business Trusts Bill -which is the fact that the business trust has to be run by a single responsible entity - the trustee-manager - who will have the dual responsibility of safeguarding the

interests of unitholders as well as managing the business of the business trust. This combined role is something which we thought about very hard and it featured in the consultations that MAS had with the public. Over the year, both interested playersand a range of professionalsgave their comments on this.We considered them very carefully, andhave decided to stick with this single responsible entity model.

The reasons are quite important. In Australia, they initially had the bifurcated model wherethey had a separate independent trustee anda manager of the business enterprise of the business trust. And there were a few cases that had to go to court where the court found difficulty in apportioning liability between trustee and the manager. We are quite clear in our mind. We want to ensure that the fiduciary responsibility towards unitholders is clearly placed on a single entity - the trustee-manager.

Mr Ong is right that, typically, it will be a situation where the people who are managing the operations of the business that is being divested will end up being the people who are running the trustee-manager. They will have to take on added responsibilities. Beyond the responsibilities of running and operating the business, they will have to take on the responsibilities of being a trustee. It means that they have to appoint a board of directors with suitable qualifications. Some members of the board will typically be people with the requisite expertise in performing the duties of trustees. They can also appoint agents and advisers to help them fulfill their obligations as trustees, but the obligation remains with the trustee-manager as a single entity.

Compliance cost will be there, I agree, and it flows from two facts. First, there

is an inherent conflict of interest that the trustee- manager faces between the duties that it owes to its shareholders - usually theshareholders ofthe sponsoring entity that sets up the trustee-manager - and the duties that it owes to unitholders who invest in the business trust. There is an inherent potential for conflict of interest.

A second reason why we had to place all these additional requirements on the trustee-manager and its directors is the fact that unitholders in the business trusts do not have quite the same powers that shareholders in a company do. In particular, unitholders cannot vote out directors, cannot vote on the appointment of directors of the board. So it does mean that we had to mitigate this lack of control with a range of other measures, to place other responsibilities on the trustee-manager and its directors that ensure that they will put priority on the interests of unitholders wherever there is a conflict of interest between the unitholders and shareholders. This explains thevarious corporate governance and audit committee requirements which we have placed which go somewhat beyond what the normal Companies Actrequirements do.

It will be a little onerous for small companies. Mr Ongis right. But I think it will typically be large companies running infrastructure businesses that will avail themselves of this new business structure and this new legislation. Smaller businesses, if they wish to run business trusts, can always offer units in the business trust to accredited institutional investors; in other words, non-retail investors and they will not be bound by the requirements of the Business Trusts Bill. So that opportunity is there.

Both Mr Ong and Mr Andy Gan have raised the issue of creditors' rights. It is a very important issue. We are not going to deviate from the trust law position on creditors' rights. The trust law position

will continue to apply to business trusts. We have received comments from various parties during the consultations, both for and against this position. We have decided that we should stick with this position - the trust law position will apply. It means that creditors can be repaid from the assets of the business trust provided the trustee-manager has not acted in breach of trust in incurring the liability.

Australia and Canada also have not departed from trust law in this regard. In the UK, there have been some discussions as part of their corporate law review but there has been no change implemented as yet.

Mr Ong is right that creditors will have the added responsibility of verifying whether the trustee-manager is acting in breach of trust and, consequently, whether creditors can claim the assets of the business trust. This is something that creditors will have to do. It is, of course, open to the sponsoring entity of the trustee-manager to provide some form of guarantee to creditors, if necessary. The loan agreement can contain such guarantees so as toprovide some further assurance to creditors. But we would not want to depart, at this point, from the basic positionin trust law that you can only claim the assets of the business trust if the trustee-manager had, in the first instance, acted in good faith and without breach of trust in incurring liability.

We are also a little wary of departing from this position because it could encourage creditors to be complacent in performing their due diligence checks, and the trust property may be diminished by such creditors' claims to the detriment of unitholders.

In response to Mr Andy Gan's specific question, creditors would not have rights that go beyond what is provided for currently under trust law. That is the other side of the coin.

Mr Andy Gan had also raised the issue of penalties being a little high under the Business Trusts Bill. MAS has revised the penalties in all the Acts that it administers - the Securities and Futures Act, the Financial Advisers Act and so on not very long ago. In fact, they were revised upward substantially. Some of these penalties in the Bill may look a little higher than Members are familiar with but they are in line with all the other Acts that MAS now administers. They are not particularly high. For instance, if Members look at breach of duty by a trustee-manager, the penalty is $100,000. I would say that it is meaningful enough but it is not so onerous as to deter people from going into the business of running business trusts.

Mr Andy Gan had also asked about advisory committees and appeals procedures. The details of appeals procedures will be set out in the regulations that MAS will release and names of appeal panel members, which he had asked about, will be made public.

Mrs Fang Ai Lian had several suggestions on how we could further develop the capital markets including REITs. Mr Ong Kian Min had also specifically

mentioned the market for bonds, including listed bonds, and I agree with their observations that these are instruments worth developing. They add diversity and depth to our capital markets. MAS is promoting both these instruments. In the bond market,we are working very hard trying to promote a diversity of borrowers, both local and foreign, government and non-government, multi-lateral agencies as well -even the African Development Bankhas raised funds inSingapore. We will continue to do this through road shows, through the investment banks as well as on our own. MAS is going out with the industry to market the Singapore Dollar bond market. As it develops greater liquidity, I think you will find that there will be greater

incentives for corporates to participate in the bond market. And the growth of the corporate bond market has been quite significant in the last two years.It has been much faster than the growth in other funding instruments. So we will continue to do this.

The tax position on REITs, if they choose to register under the Business Trusts Act, will be no different from what it is for other business trusts. In other words, the fact that they are REITs and they can alternatively be registered as a collective investment scheme will not change the tax treatment if they register as a business trust. So, REITs have a choice as to where they want to register. If they register under the Business Trusts Act, they will not be able to use the name "REITs" and they will be subject to the tax treatment that appliesto all business trusts. In other words, they will be taxed at the corporate rate, at the trustee level, and distributions of the trust would be treated as exempt one-tier dividends in the hands of unitholders. I am sure the Minister for Finance heard Mrs Fang Ai Lian'sarguments and will consider them. But the position at this point remains quite clear.

Mr Speaker, I think I have covered the main points that were raised by the three speakers. So, once again, I would like to thank them.

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 Tharman Shanmugaratnam].

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

Order. I suspend the Sitting and will take the Chair again at 4.40 pm.

Sitting accordingly suspended at 4.18 pm until 4.40 pm.

Sitting resumed at 4.40 pm

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

The Securities and Futures Act (SFA) was passed in October 2001. In September 2003, the Securities and Futures Act was amended to implement some of the recommendations of the Company Legislation and Regulatory Framework Committee (the CLRF Committee). The second phase of amendments, targeted for First Reading in October 2004, will give effect to the remaining recommendations of the CLRF Committee which the Government has accepted.

Prior to the second phase, we are amending the Securities and Futures Act concurrent with the new legislation which Parliament has just passed, which provides for a new business trust structure in Singapore. The Securities and Futures Act amendments will provide for the regulation of offers of units and derivatives of units in business trusts and take-over proceedings for business trusts.

The Monetary Authority of Singapore (MAS) invited feedback from the industry and the public on the draft Bill in December 2003. MAS has posted on its website its detailed responses to the comments received during this consultation.

Mr Speaker, Sir, I will now go through the main provisionsof the Bill.

Regulation of offers of units and derivatives of units in business trusts

The Bill introduces a new Division 1A in Part XIII of the Securities and Futures Act to regulate the public offers of units and derivatives of units in business trusts in the same way as offers of shares in corporations. The intention is to enable investors to make informed investment decisions by requiring all material information relating to the business trust to be set out in the prospectus. Investors will also have the same statutory protections that subscribers to share offers have.

Registration of business trusts under the Business Trusts Bill will be voluntary. However, now section 282C(1)(a) of the Bill will require business trusts offered to retail investors to be registered under the Business Trusts Bill and therefore subject to a governance framework which seeks to safeguard investors' rights and establish the duties and accountability of trustees and their directors.

Amendment to the definition of securities

The definition of "securities" in the Securities and Futures Act will be amended to include units and derivatives of units in a business trust so that the provisions under the Securities and Futures Act relating to securities will also apply to business trusts, including provisions relating to market conduct. With the amendment to the definition of "securities", financial advice provided in relation to units and derivatives of units in a business trust will also be regulated under the Financial Advisers Act.

Regulation of take-over proceedings for business trusts

The definition of "take-over offer" in the Securities and Futures Act will be

amended so that take-over offers for units in business trusts will be subject to the relevant provisions under the Securities and Futures Act and the Singapore Code on Take-overs and Mergers. This is to ensure a fair and orderly market for take-overs of business trusts.

Regulatory treatment of property trusts

Property trusts or Real Estate Investment Trusts (REITs), as they are more commonly known, are currently regulated as collective investment schemes (CIS) under the Securities and Futures Act. Property trusts fall within both the collective investment scheme and business trust regimes. Rather than prescribe a specific approach, the Bill will allow a listed property trust to choose to be structured and regulated as either a collective investment schemeor a business trust. To avoid confusion to investors, any property trust regulated as a business trust will be prohibited from being referred to as a "Real Estate Investment Trust".

Conclusion

In conclusion, the capital markets are constantly innovating and the regulatory framework must respond. This Bill facilitates the offer of units and derivatives of units in business trusts in Singapore, and in so doing, creates a new asset class which could potentially add depth and sophistication to Singapore's capital markets.

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 Tharman Shanmugaratnam].

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."

Introduction

Sir, the Criminal Law (Temporary Provisions) Act (CLTPA) was enacted on 21st October 1955. Since then, Parliament has extended it 10 times. The last time was five years ago in 1999. The Act will expire on 20th October this year. This Bill seeks to extend the Act for another five years. The Bill also amends the Act to provide for the taking of body samples for DNA profiling of persons arrested, detained or placed on police supervision under the Act.

Need for the Act

Sir, five years ago, I informed this House of the improved secret society (SS) and drug situation and asked "Does it therefore mean that we do not need the Act anymore?" Sir, the answer I gave, which the House endorsed by passing the Bill, was a clear "No". Over the past five years, the SS and drug situation has continued to improve considerably. But, my answer today is still an emphatic "No". Though suppressed, secret society activities and violence still rear its ugly head in Singapore. Let me highlight a few examples to illustrate how the Act has proven to be effective against secret societies, syndicated criminal activities as well as drug trafficking.

Secret societies/triads

Sir, in April last year, arising from an earlier dispute, members of one secret society attacked a member from another secret society. One person was fatally stabbed. In another incident, in the year 2002, rioting between members of two secret societies resulted in a 21-year old man being stabbed to death.

Extortion and protection rackets

In 2001, members of a secret society operated a protection racket to extort money from operators of KTV lounges and entertainment outlets in the vicinity of Joo Chiat Road, East Coast Road and Kallang Leisure Park. They confronted the lounge and pub managers demanding a monthly "protection fee" of $500. They also insisted that their gang members be hired as security officers in the outlets for $1,500a month. The operators had kept quiet for fear of reprisal.

CID crippled this gang and arrested 16 members of the "protection racket". Five of them were placed on Detention Orders (DOs) while the rest were placed on record by the Registrar of Societies or warned by CID.

Illegal moneylending syndicates

Another syndicated activity that is dealt with under the Act is illegal moneylending. In today's context, a typical unlicensed moneylending syndicate operates in various parts of Singapore. The syndicate adopts different aliases in its moneylending activities to evade police detection. The "Towkay" or "Boss" operates behind the scene and engages "office support staff" and runners to assist in operating the illegal moneylending "stalls". Debtors who default on their payments are harassed by the runners at their homes. The usual intimidation, I think as many of us would know on the ground,tactics include

smashing of flower pots and splashing of soil or paint on debtors' doors.

Routine police operations usually only result in frontline syndicate members being arrested and prosecuted in court for their illegal moneylending offences. The "Towkays" who are leaders operating behind the scene, earn big bucks but they go unpunished.

Syndicate members would not testify against the "Towkay" for fear of reprisal. These syndicate leaders continue to expand their operations and perpetuate their nefarious activities with impunity by recruiting new members to replace those arrested and prosecuted. Instead of letting them go unpunished, we have to deal with them under the CLTPA.

Triad and organised criminal gangs in the region

Furthermore, Singapore is vulnerable to infiltration by triads and organised criminal gangs from countries, such as Hong Kong, China, Japan and Malaysia. These East Asian Gangs or "EAGs" are driven by profit and have no qualms about committing cross-border crimes if the opportunity arises. We must therefore be constantly on guard.

Singapore has succeeded in keeping itself free from triad-related problems faced by some of our neighbouring countries. A key factor that has deterred EAGs from locating their activities here is the Criminal Law (Temporary Provisions) Act, working in synergy with our tough laws, effective enforcement actions and a non-corrupt government.

Drug trafficking

Another area where the CLTPA is indispensable is drug trafficking. Drug trafficking is an extremely lucrative trade. Drug traffickers and syndicate leaders have become very sophisticated in their

modus operandi. They deviously stay clear from the actual drug transactions and activities themselves. Instead, couriers, organisers and recruiters are engaged to conduct the business.

Allowing the Act to lapse may be misinterpreted as a softening of our tough stance and a weakening of our resolve or ability to deal with drug trafficking. This would be a wrong signal to send and may encourage international drug trafficking syndicates to use Singapore as a staging point for their illicit drug activities. More drugs will then find their way to the local population, resulting in higher "contamination" levels.

We should not expose ourselves to this possibility.

In short, Sir, secret society, syndicated crimes and drug trafficking activities have declined considerably and are under control. However, the possibility of resurgence is always there. We, therefore, still need the strong deterrence offered by the Act.

Built-in safeguards

Having explained why the Act is still necessary today, let me assure Members that there are adequate safeguards incorporated into the Act as well as built into the administrative procedures to ensure that endorsement agencies do not abuse their powers and resort to using the Act without the strongest justification.

First, any proposal by police or CNB to detain a person under the Act or to place him under police supervision will be scrutinised by senior officials and the Ministry of Home Affairs and the Attorney-General's Chambers before a Detention or Police Supervision Order is issued. In fact, the Permanent Secretary in the Ministry of Home Affairs and the Attorney General himself must give their consent. So, departments cannot take the easy way out. They must justify why

they recommend using the Criminal Law (Temporary Provisions) Act.

Second, an Advisory Committee comprising prominent private citizens, such as Justices of the Peace, senior lawyers and community leaders, scrutinise the investigations and documentary evidence and may examine detainees, investigation officers and witnesses. At the Committee's hearing, detainees may be represented by legal counsel. The Committee subsequently makes its recommendation to the President.

Third, Detention Orders are reviewed annually by a separate Review Committee, also comprising prominent private citizens. Members of the Review Committee are distinct from the Advisory Committee, ensuring independent decision making. Any recommendation to extend detention for a further 12-month period must also be approved by the President.

Fourth, a separate Review Board, also with a different set of members, will consider all cases of detention extending beyond 10 years. This process ensures that cases where persons have been detained beyond 10 years are specially scrutinised to determine that they have not been detained longer than necessary.

Finally, coming before Parliament every five years to renew this Act is an additional safeguard to ensure the Act is still needed in view of changing circumstances, and that it is being applied properly.

Once again, let me assure this House that, where there are witnesses willing to testify in court, we will definitely charge the culprits in court. But where victims and accomplices refuse to testify in open court, the Criminal Law (Temporary Provisions) Act prevents the mastermind

and syndicate leader from getting away scot-free to enjoy their ill-gotten gains. Even when invoked, the Act is not used as a blunt instrument. Depending on the gravity of the offence, either a Detention Order or a Police Supervision Order can be issued.

Other amendments

Sir, let me now touch on another key amendment to the Act, which is to provide for the taking of body samples for DNA profiling of persons arrested, detained or placed on police supervision under the Act.

With advancement in technology, DNA profiling is widely used in forensic investigations in many countries. It has become an important tool in solving crimes. Each individual has a unique genetic DNA information. The chances of two persons in the world sharing the same DNA profile are in the region of one in 250 billion.

The Registration of Criminals Act (RCA) was amended in 2002 to provide for the establishment of a DNA database of criminals convicted in court for registrable offences. The Singapore Police Force DNA database became operational in February 2003 and was officially launched in July this year. But, in fact, police has been using DNA forensics from as early as 1991. Back then, DNA testing was largely confined to the direct matching of a suspect's DNA profile with that collected at the crime scene. The new DNA database, however, comprises both the offenders' DNA profiles as well as DNA profiles recovered from crime scenes. This is particularly useful in pinning down repeat offenders as their DNA profiles are matched against DNA profiles collected from crime scenes.

Detainees and supervisees under the Criminal Law (Temporary Provisions) Act have been known to be involved in other

crimes. A check on those issued with detention and supervision orders from 1994 to 2003 showed that 60% of them were found to have conviction records. Hence, this amendment will ensure that our DNA database is more comprehensive and, in turn, it will help improve intelligence and focus investigative efforts for more effective crime solving.

Sir, take, for example, a case last year where the glass door to an office was shattered and several items were stolen. Three bloodstains were found at the scene and the DNA was analysed. Several months later, the DNA profile from the bloodstains were found to match that of a prisoner who was serving sentence in prison for another offence then. Without the DNA database, the offender might have gone unpunished for the crimes he committed.

It is, therefore, timely and essential to provide for the taking of body samples for DNA profiling for persons arrested, detained or placed on police supervision under the Criminal Law (Temporary Provisions) Act.

Sir, I beg to move.

Question proposed.

Sir, I rise to speak in support of this Bill.

It is called the Criminal Law (Temporary Provisions) Act, but it has been with us since 1955. I think it is older than most of us and it gives a new meaning to the word "temporary". So, I wonder, first of all, why is it that we cannot call a spade a spade and call it the Criminal Law Preventive Detention Act?

Sir, there is a common principle of justice that no man should be imprisoned without an open trial, no man should be imprisoned without the chance to face his

accusers in court, listen to the evidence against him and to challenge it. But we live in difficult times, and preventive detention is now seen more of a necessity, maybe a necessary evil, than not to have it at all. In fact, it is interesting to note that even in liberal countries, such as the United States and the United Kingdom, after 9/11 attack, they were compelled to provide legislation for preventive detention, but they use it mainly against terrorism, for which we have the Internal Security Act.

Sir, this Bill comes before us for an extension for another five years and it is to be strongly supported. But we must be careful. Public confidence will be eroded if we use preventive detention too freely, and it is very reassuring to hear from the Senior Minister of State that there are safeguards and checks in place to make sure that the power to order a preventive detention is carefully constrained. However, there is a question as to why we cannot have a schedule perhaps listing down the serious crimes of which the Senior Minister of State has mentioned, eg, drug trafficking, even human trafficking, syndicated crime, secret societies. Why can we not have a scheduled list of offences where this particular Act should apply? Why is this necessary? I think it would be good for the public in Singapore and for Members of this House to know the limits of this law, that preventive detention is seen more as an exception rather than the rule. Public confidence will be better if we can say that only in certain instances where it is absolutely necessary that we will have this Preventive Detention Order in place.

Sir, having made these comments, I do hope that we will be able to see less of the crimes that the Senior Minister of State has mentioned and, of course, at the end of the day, the presence of this particular piece of legislation is definitely a deterrence to all those who wish to come

here and think that they can beat the system, as the Senior Minister of State has said, by avoiding open trials. I think it is a very good Act to support, and I strongly support it.

Resolved,

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

Debate resumed.

5.10 pm

Sir, the Criminal Law (Temporary Provisions) Act has been in our legislative books for a long time. But over the years, as a child, NSman and lawyer, I have come into contact with many people who have been detained under the Criminal Law (Temporary Provisions) Act. I remember, as a child, in the neighbourhood where I lived, there were many gangs and gang members who used to thrive. Slowly, word got around about the famous section 55 of the Criminal Law (Temporary Provisions) Act and, surely and certainly, over a period of time, we slowly saw them disappear. We also saw peace and security returning to our neighbourhoods. In the course of my National Service as a Police National Serviceman, I also came across many of these secret society personnel who used to intimidate businesses, individuals and many others whom they can intimidate in order to control territory or to raise money for themselves or for their group. As a

lawyer, I also came across instances where individuals have been detained and when I think that they have been rightfully detained under the Act for some of the acts that they had carried out in the course of their gang or other related activities.

Sir, while I am assured by the Minister's information to this House that the number of persons who have been detained under the Criminal Law (Temporary Provisions) Act has come down - I think that is a very welcome sign - I, for one, will certainly support the continuation of this Act for the simple reason, not so much for the number of people we have detained over the years, but the many more whom we have deterred from entering into these triad gangs, drug trafficking or any other form of major criminal activities where they think they can bluff our legal system.

Sir, there are many types of international syndicates, eg, the mafias, the yakuzas and the triad gangs referred to by the Minister as the EA gangs. I, for one, in the course of my conversation with many people, have heard that many of them have come to scout around in Singapore to look at criminal opportunities in Singapore. But when they realise that we have a law which allows them to be detained if they indulge in these activities because we are unable to get witnesses, I think it has deterred many more. And that is the major benefit of this Act and, because of that, I would support the continuation and the extension of this Act.

What I am equally impressed is that the detainees are given a fair hearing and are fairly treated. I have met members who have served on the Committee, and I can inform the House that many of them are people who would like to see that these people who are detained have a fair hearing. They look through the investi-

gation papers,call upon the investigation officers to satisfy themselves that these detainees are indeed detained under the proper conditions laid down in the Act.

But, more importantly, Sir, what I would like to see is how can we reintegrate these detainees into society much better when they have servedtheir detention period. Are we doing enough to allow them to reintegrate into society by getting jobs faster or help them in any way to upgrade their skills or education so that they are able to integrate into society?

The other provision that is important here is the taking of the DNA samples under the new proposed amendments. What I would like to ask the Minister is: in cases where DNA samples are taken from those who are detained and who are subsequently released because of a lack of evidence or for some other reason, how can we conduct the process in a very transparent manner whereby the person who was wrongfully detained feels that his records or DNA samples are not kept in any way in any record in any form?

On that note, Sir,I support the Bill.

Mr Speaker, Sir, the Criminal Law (Temporary Provisions) Act was passed in October 1955. It is an Act to make temporary provisions for the maintenance of public order, the control of supplies by sea to Singapore and the preventionof strikes and lockouts in essential services which include banking, broadcasting, electricity, gas, immigration, newspapers, port, dockand harbour, postal and telecommunications, prison, public transport and air transport, securities and futures contracts, water, Singapore Armed Forces, Monetary Authority of Singapore and customs services -just to name afew.

In fact, surprisingly, all these are found in this particular Act. This original intention has been expanded to detain subversive elements involved in criminal activities like secret society and drug trafficking activities. This Bill proposes to extend the period of validity of this Act for another five years, from 21st October 2004.

Parliament has been doing this every five years as my colleagues in Parliament have stated, for some time now. It has extended this Act, like the Senior Minister of State said,10 times for 50 years. Perhaps it is time to consider whether to make it a permanent law, or to repeal it, and have this statute in a form similar to other statutes. The name "temporary provisions" is unsuitable and is a misnomer.This statute has been in existence almost permanently for the last 50 years. Why not just call it Criminal Law (Special Provisions) Act or, as Prof. Chin suggested, Criminal Law (Preventive Detention) Act, without a need for extending the validity period?

Section 27A gives police officers or officers of the Central Narcotics Bureau much wider powers against arrested person, including the power to take or cause to be takenphotographs and finger impressions, make records of the registrable particulars and any other particulars of such person and cause body samples of such person to be taken, send any photograph,finger impression, record of particulars or body sample so taken or madeto the Commissioner of Police for identification and report. Section 27A also gives these officers powers to do the above, even though the person has not really been convicted but only arrested or detained. There may not be a trial in the court of law under this Act. I would therefore caution that stringent measures be taken and that checks and balances be put in place so that there is no injustice done to arrest the person. A person arrested or detained has little choice

because, under section 27A(3), if he fails without reasonable excuse to comply with the submission to the taking of his photographs and finger impressions or provide such registrable particulars or submit to the taking of his body samples by an authorised person, then that person shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding $1,000 or to imprisonment for a term not exceeding one month or to both. So, he has got no choice. And a police officer or an officer of the CNB may use such force as is reasonably necessary to take or cause to be taken the photographs,finger impressions and body samples of that person.

Section 27B talks abouta police officer who hasreceived training for the above purpose. It is important therefore that proper training is conducted by competent persons and experts in this field as all these affect the liberty and privacy of our citizens. There must be a fair balance of individual rights as compared to public interest and to comply with the fundamental liberties provided for under the Constitution of Singapore.

Section 27C(3), Sir, is fair and balanced and is most welcome. It deals with any photograph, finger impression, record of particulars or body sample that has been taken under section 27A from an arrested person and that person is subsequently released, without being convicted of any offence under this Act, or placed on detention or supervision under this Act. Then the Commissioner of Police shall remove these items from the register and DNA database maintained under this section. As my colleague, Mr Ravindran has mentioned, the public must be confident thatthese records are removed and there are no traces left with the authorities.

Section 27C(4) creates a greater burden on accused persons. Information

in the register and DNA database and any certificate or report made from that informationare admissible in evidence in court if produced from proper custody and authenticated by the signature of the Commissioner and is prima facie proof of the matters contained therein or appearing thereof. This is a liberal approach, Sir, in favour of the prosecution, as compared to the normal burden and standard approved required under our Evidence Act. So this is something to be looked into too.

Sir, there must be transparency, checks and balances and also proper supervision and control. It is important to have prevention of misuse by persons in authority and respect for confidentiality and secrecy. Therefore, in passing this Bill, I hope that the enforcement agencies will take note of the points that have been raised here. I would also like to add that I am involved in this Criminal Law (Temporary Provisions) Act. I have served in the Committee for more than 15 years and on that, I can safely say that there are good and very effective safeguards. But having said that, I think it is also important to review this particular statute to see if a better form could be made out.

Mr Speaker, Sir, thank you for allowing me to speak on this subject.

I appreciate what the Senior Minister of State has explained, in terms of the rationale for introducing such a Bill, and how it is coming up again for review after five years. While I support the Bill, I have a few questions pertaining particularly to the DNA aspect of it. I bring this upin particular reference to the younger people whom he hasidentified earlier on as runners.

Firstly, we do know that police investigations involve a certain degree of coercion and persuasion. In this particular aspect, I wonder how the younger runners - they are not yet offenders - or their

parents are persuaded to give consent for a DNA sampling. I ask this because some of them could have made a mistake earlier and the DNA profiling continues for the rest of their lives. They may have even turned over a new leaf in due course. How would this DNA profiling follow them through?With that, I would like to tie up what Prof. Chin Tet Yung brought up earlier. Wouldit not be better to have a two-tier scheme of offences? Because the DNA profiling is very potent and when it comes to the younger persons, there must be a second chance given to them especially when certain offences are committed when they are young.

The second point has already been mentioned byMr Ravindran and Mr Chandra Mohan. If the person is found not to be guilty, how is the DNA record expunged from his personal record? How is that scheme or method told to the individual? What is the level of reassurance that we, as citizens, can have, when we know that the DNA profile is destroyed?

These aremy two questions and I hope I can get some clarifications.

First, let me thank all the four speakers for making the points that they have made, which gives me an opportunity to elaborate further on the Bill and, in particular, to thank Mr Ravindran and Prof. Chin who strongly support the Bill. Of course, I note that Mr Chandra Mohan and Ms Braema Mathi also see the need for the Bill and, indeed, the personal experience of Mr Mohan in sharing about how over the years he has found the safeguards of the committeeto be somethingvery real. I think that is a very good sharing at a personal level.

First, let me take the point about the offences under the Bill. I think that is an important point. As I have said in my speech, the requirement and the common

thread under which offences fall within theBill are situations where witnesses fear to testify because of reprisal, and that is a key point. And I havealso given the assurance that where we can prosecute, we will prosecute because the court process inopen court is the norm. And that is indeed a core principle ofour legal system. But as all the speakers have said, there are situations where, particularly,syndicates are involved. So that if you have witnesses to come and testify against that person who goes in, there are peopleoutside especially underlings, who will harasshim, his family members and people who know him. That is a real fear. We should take it from that perspective and also from the fact that we have operated this Act for,as all of you have said, almost 40 years. And each time we come to the House, every five years, we explain why the Act is necessary in the context of the situations that have arisen and, therefore, Singaporeans know that we use the CLTPA for offences such as secret societies andgangs that are involved. We have also been tackling money-lending syndicates with the CLTPA and, in particular, drug trafficking syndicates.

I would say,let us give the Minister that flexibility, but always on the core principle whereby court prosecution is the norm and the basis upon which the Act is invoked is when witnesses fear to testify. That, in fact, is a common thread becauseas Members in this House - Mr Mohan and one or two other lawyers -who sit on the Criminal Law Advisory Committee know,it is an elaborate process where, in order to justify a detention, whether it isthe CNB or police, they have to build up and establish a case, more often than not, including witnesses' statements and listing out all the activities that have taken place and then making a convincing case not just to the Minister, who ultimately decides, but also the Permanent Secretary and Attorney-General.

This, plus the fact that the Act is used sparingly and indeed over the years, the number of criminal law detainees has come down. Last year, it was 211. The last time when I came to this House in 1999when we renewed it - the figure given (for 1998) was 463. And before that, in 1988, it was 1,260. The fact is that the Act is not used willy-nilly, nor used as a substitute for court prosecution, but only when the grounds justify it. The fact that it is used sparingly, and the safeguards that all of us have shared in this House are effective, would keep public confidence highas to, firstly, why the Act is needed and, secondly, the correct and justified use of the Act.

I think Mr Ravindran isspot-on when he said that the Act is a strong deterrent especially against foreign triads who may be surveying the land. We know that foreign triads are very opportunistic, they are quite mobile, they are very pragmatic and they go where the money is. Here is another reason why we should not circumscribe the use of the Act but give the Minister the flexibility which this Government, current Ministers and all Ministers before - have and will not abuse.

The second point is the renaming of the Act. This is an interesting point why we have a temporary provisions Act that has lasted now 50 years, and previous officer holdershave come to this House10 times - not me,I have come twice - to argue for its renewal.I think there are basically three reasons. First is, what I have alluded to earlier,the educational effect of coming to this House -having to explain that beneath the calm of Singapore, we do have bad elements,not just normal criminals,but in particular criminals, syndicates, sometimeswith foreign links, who will want to destroy our safety and security. So when young Singaporeansread about this, they will

realise that, yes, Singapore's safety and security cannot be taken for granted. We have a whole plethora of weapons inour arsenal, key of which is the Criminal Law (Temporary Provisions) Act.

The second one is that it is a reminder to all of us when we come to this House every five years that what we are doing when we invoke the Act - I think Prof. Chin mentioned that -is not the norm. The norm is court prosecution. And it is also a reminder to our officials out there, the law enforcement agencies, that when they want to invoke the Act, they must adhere to all safeguards. They must not abuse the easewith which they think, or some may think ormay be tempted to think theysecure detention. I am not saying any of them think this way, but it is also a reminder that they must not take this avenue too easily.

The third one of course is the check. Because Parliament has to approve this Act every five years,Members would have the opportunity to say, "No, I do not want to renew it". So the Minister has to come here and explain to the House, give youthe situation, cite the figures to show that, yes, we still do need the Act. Hence, coming to the House every five years has a salutary effect. So let us keep to that.