Hansard, 2004-10-19

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 David T E Lim 23 Sep 23 Sep 25 Sep 01 Oct 05 Oct 11 Oct 24 Oct 26 Oct 30 Oct 01 Nov Mdm Ho Geok Choo 25 Sep 01 Oct 03 Oct 06 Oct Mrs Yu-Foo Yee Shoon 25 Sep 09 Oct Miss Penny Low 27 Sep 30 Sep 11 Oct 21 Oct Mr Leong Horn Kee 28 Sep 01 Oct 28 Oct 29 Oct Dr Mohamad Maliki Bin Osman 28 Sep 01 Oct 24 Oct 02 Nov Mr Charles Chong 01 Oct 23 Oct Mr Cedric Foo Chee Keng 02 Oct 13 Oct Assoc. Prof. Ngiam Tee Liang 02 Oct 06 Oct BG George Yong-Boon Yeo 04 Oct 05 Oct 07 Oct 09 Oct 26 Oct 29 Oct Mr Lee Hsien Loong 04 Oct 05 Oct 07 Oct 09 Oct 20 Oct 20 Oct Mr Sin Boon Ann 04 Oct 05 Oct 07 Oct 09 Oct 12 Oct 12 Oct Column: 799RAdm Teo Chee Hean 04 Oct 05 Oct 26 Oct 29 Oct Mr Tharman Shanmugaratnam 04 Oct 05 Oct Dr Balaji Sadasivan 05 Oct 06 Oct Assoc. Prof. Low Seow Chay 05 Oct 05 Oct Mr Inderjit Singh 06 Oct 10 Oct Mr Mah Bow Tan 06 Oct 08 Oct Mr Gan Kim Yong 07 Oct 10 Oct Dr Wang Kai Yuen 07 Oct 11 Oct Mr Raymond Lim Siang Keat 08 Oct 10 Oct Mr Lim Boon Heng 10 Oct 16 Oct Mr Wee Siew Kim 10 Oct 12 Oct 31 Oct 05 Nov 03 Dec 21 Dec Dr Tan Cheng Bock 11 Oct 13 Oct 26 Oct 02 Nov 10 Nov 15 Nov Mr Chay Wai Chuen 12 Oct 14 Oct 18 Oct 20 Oct 06 Dec 22 Dec Dr Ong Chit Chung 12 Oct 12 Oct 08 Nov 12 Nov 23 Nov 26 Nov Mr Ong Kian Min 12 Oct 15 Oct Mr S Iswaran 12 Oct 16 Oct 24 Oct 27 Oct Mr Abdullah Tarmugi 14 Oct 17 Oct Dr Michael Lim Chun Leng 14 Oct 16 Oct Mr Ang Mong Seng 15 Oct 17 Oct Mr A Nithiah Nandan 17 Oct 22 Oct Mr Chan Soo Sen 17 Oct 22 Oct Mr R Ravindran 17 Oct 22 Oct Mr Yeo Guat Kwang 17 Oct 22 Oct Mr K Shanmugam 19 Oct 19 Oct Mr Lim Hng Kiang 19 Oct 20 Oct Ms Olivia Lum Ooi Lin 19 Oct 19 Oct Dr John Chen Seow Phun 20 Oct 21 Oct Mr Goh Chok Tong 24 Oct 01 Nov Dr Tony Tan Keng Yam 24 Oct 02 Nov 08 Nov 11 Nov Mr Chew Heng Ching 26 Oct 02 Nov Column: 800Dr Ng Eng Hen 26 Oct 31 Oct Mr Matthias Yao Chih 08 Nov 13 Nov Assoc. Prof. Koo Tsai Kee 11 Nov 15 Nov

RAdm Teo Chee Hean

Dr Ng Eng Hen

ABDULLAH TARMUGI Speaker Parliament of Singapore

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

27th September,2004 (1) Supreme Court of Judicature (Amendment) Bill (2) Employment (Amendment) Bill (3) Children Development Co-Savings (Amendment) Bill (4) Universities (Miscellaneous Amendments) Bill (5) Public Utilities (Amendment) Bill (6) Hire-Purchase (Amendment) Bill (7) Land Surveyors (Amendment) Bill ABDULLAH TARMUGI Speaker Parliament of Singapore

[Mr Speaker in the Chair]

1. Mdm Halimah Yacob asked the Senior Minister whether there is any basis for the US State Department's allegation that Singapore is a major money-laundering country.

2. Mdm Halimah Yacob asked the Senior Minister (a) whether there are sufficient safeguards to prevent money-laundering and terrorist financing activities; and (b) how does the Monetary Authority of Singapore ensure that banks fully comply with such measures.

Mr Speaker, Sir, may I take Question Nos. 1 and 2 together, please?

Yes.

The US State Department's International Narcotics Control Strategy Report for 2003, which was released on 1st March 2004, listed a range of jurisdictions as being of primary concern in respect of money laundering from international narcotics trafficking and other serious crimes. Singapore was included in that list together with the UK, France, Germany, Hong Kong, Italy, Japan, Luxembourg, Switzerland, as well as the US itself. In short, all the major financial centres of the world were included in the list.

The US State Department Report did not provide any basis for suggesting that Singapore-based financial institutions engage in transactions involving a significant amount of proceeds from

international narcotics trafficking and other serious crimes.

However, money laundering must be a concern in every country, and especially in international financial centres which handle huge volumes of transactions on a daily basis. Singapore takes its responsibilities very seriously in this regard. We are a member of the Financial Action Task Force (FATF), the international body that develops policies and standards to combat money laundering and terrorist financing. The US State Department's Report indeed acknowledges that Singapore strongly opposes money laundering and terrorism financing and has been a key player in the regional effort to stop terrorist financing in Southeast Asia.

MAS requires all banks and financial institutions operating in Singapore to institute rigorous measures to guard against money-laundering and terrorist financing. These include the need to identify and know their customers and their customers' source of funds. They also have to maintain the records necessary to reconstruct and explain details of transactions, and to report all suspicious transactions. MAS conducts both offsite reviews and onsite inspections of banks and financial institutions to ensure that these measures are in place. External auditors engaged by banks and financial institutions are similarly required to audit for compliance with MAS regulations. Through these rigorous processes, banks have identified and filed suspicious transaction reports with the Commercial Affairs Department CAD). CAD investigates these reports and, where it finds wrongdoing, it will take firm action.

In August 2003, Singapore completed its IMF/World Bank Financial Sector Assessment Programme. The team of assessors found that Singapore has a comprehensive legal, institutional, policy and supervisory framework to combat

money laundering and terrorism financing. They also noted that our financial institutions have a strong compliance culture for requirements to combat money laundering and terrorist financing.

Singapore will stay fully committed to the international effort against money laundering and terrorist financing. Our high regulatory and supervisory standards are recognised internationally. The integrity of our financial sector is a key asset which we intend to preserve.

Sir, the Minister has given a comprehensive reply to the questions. My question to the Minister is: what else can be done in order to have Singapore removed from the list in view of the fact that we have put so many safeguards and measures in place and yet we have been cited in the report since 1987?

My second question is whether the US State Department has cited any specific incidence or evidence to support their allegation that we are a major money-laundering country because Singaporeans are obviously very concerned over this label and they would like to see it removed.

My third question is what other steps have been taken in order to try and make clear our position and make the US State Department understand our position, in particular, whether we have tried to enlist the help and get our Embassy in the US to speak to the US State Department or get the American Ambassador here to do so.

My final question, Sir, is whether there has been an increase in the number of suspicious transactions reported by the banks and whether there has been any prosecution by the CAD arising from such reports.

I would like to thank Mdm Halimah for her useful questions. What steps can we take? It is really continuous work on the part of the banks to keep an eye out for anything that looks suspicious and to know their customers. The provisions are there not just in name. It is a real process where bank officers have to go through the full process of checking out the customers, trying to identify the source of funds and so on. It is also something which MAS takes very seriously in all its inspections of banks. It is a regular feature of the offsite review of information that is provided from the banks to the MAS, as well as the inspections we do when we go onsite to the banks themselves. We look up their records, check some transactions, speak to them about their processes, and speak to the audit committee, and so on. So it is something that we take very seriously.

There were no specifics mentioned in the latest report to justify Singapore's inclusion among the jurisdictions suspected of being money-laundering centres. But one can infer from the list of countries included that all the major financial centres, by virtue of the fact that they have a very large volume of transactions, including currency transactions, passing through their centres on a daily basis, both onshore and offshore, are vulnerable to money laundering. We should not deny that. As an international financial centre, we should take it all the more seriously and keep working at it.

Yes, we will keep up with our communication with the US State Department. I think they understand our position. They themselves have recognised in their report that Singapore is in the forefront of the fight against money laundering and terrorism financing and we will keep our line of communication with them.

Can Mdm Halimah please repeat her fourth question?

My fourth question is: has there been an increase in the number of suspicious transactions?

Unfortunately, I do not have the data with me. Reporting of suspicious transactions is a mandatory requirement under the law. Failure to comply is a criminal offence. So our banks take it very seriously. You will see the number moving up and down from year to year. I do not think we see an uptrend as such. Yes, there have been prosecutions. In fact, over the last three years alone, there have been more than 10 prosecutions by the CAD.

3. Mdm Ho Geok Choo asked the Minister for Foreign Affairs (a) if he will update the House on the Prime Minister and Minister for Finance's recent visit to Malaysia; (b) what was the tipping point that led to the new wave of good tidings between the two Prime Ministers; and (c) how can it be ensured that the new relationship will be maintained for the mutual benefit of both countries.

Mr Speaker, Sir, Prime Minister Lee Hsien Loong made his introductory visit to Malaysia on 4-5th October 2004. This was his second introductory visit to an ASEAN country to meet his counterparts. Although brief, it was a good visit.

Prime Minister Abdullah Badawi and the Malaysian government accorded Prime Minister Lee and the Singapore delegation a warm welcome. Prime Minister Lee held a private, four-eye meeting with Prime Minister Abdullah, followed by a full delegation meeting. The two Prime Ministers, who are also Finance Ministers, signed a new Double Taxation Agreement (DTA) which will eliminate double taxation

and promote cross-border investments. Their discussions focused on the two countries working together to strengthen bilateral ties, and to develop new areas of win-win cooperation. We already cooperate in a broad range of areas, including trade and investments, tourism, security as well as in handling problems like SARS and the avian flu. The Prime Ministers agreed that the two countries should enhance cooperation in areas such as tourism and transport links, including air transport. Our private sector should also do more. Prime Minister Lee noted that the tone of bilateral relations had improved and that both sides had to "build on this and develop more momentum and cooperation".

The two Prime Ministers also agreed that Singapore and Malaysia should look ahead, and not allow problems to affect overall cooperation. On the outstanding bilateral issues, Prime Minister Abdullah put forward some suggestions. Prime Minister Lee informed him that for continuity, he had asked Senior Minister Goh Chok Tong to handle these issues. Senior Minister Goh is familiar with the details and complexities of these issues, and will study carefully any Malaysian proposals. Prime Minister Abdullah reiterated his invitation for Senior Minister Goh to visit Malaysia soon, and we are working on possible dates for the visit.

Relations between countries, particularly close partners like Singapore and Malaysia, are not driven by "tipping points" but rather by fundamental interests. In many areas, the fundamental interests of Malaysia and Singapore run parallel, and link us together. In the wider perspective, we are not each other's main competitors.

Singapore and Malaysia now see an opportunity to take bilateral cooperation to a new level. Maintaining this momentum will require hard work on both

sides. From the way we cooperated to tackle problems such as terrorism and the Avian flu, there are grounds for optimism.

But we must also be realistic. Apart from the outstanding bilateral issues, as two close neighbours, we must expect other disagreements and difficulties to arise from time to time. This is inherent in our situation. However, we must not allow these disagreements to define the entire bilateral relationship, or prevent cooperation in other areas. On this basis, I am confident that we will be able to improve our relationship in a mutually beneficial way.

Mr Speaker, Sir, I have three supplementary questions for the Minister. One is that it was reported in the papers by Senior Minister that there is an indication by Mr Abdullah Badawi for an issue-by-issue negotiation of our outstanding issues. I would like to ask the Minister whether there was this preferred indication in the past and, if not, why are we conceding to this request.

The second question would be: with this shift in negotiation from a total package to an issue-by-issue approach, would there be an impact on the outcomes of our settlement and would it be against the interest of Singapore in any way?

The third question would be: how can we ensure that agreements reached between leaders would be kept in good faith subsequently?

Mr Speaker, Sir, as Members are aware, in the past we had talked about the package and the Malaysian side decided that they should abandon the package. We suggested in that case that we let these issues be resolved separately, going to

third-party adjudication, if necessary. But when Prime Minister Abdullah Badawi came down earlier this year, he suggested that we should take a fresh look. At that time, Prime Minister Goh said that we were prepared to see what he proposed and we are still waiting for the Malaysians to propose ideas to us.

We keep an open mind on the issue-by-issue approach and I do not think we should, at this point in time, foreclose any possible solution or outcome. Will this damage Singapore's national interest? Obviously, when we negotiate we must negotiate in the interest of Singapore but try to find solutions which are win-win for both sides, and not see, as far as possible, problems or issues in a zero-sum way.

On the question of both sides negotiating in good faith, obviously so.

4. Ms Irene Ng Phek Hoong asked the Minister for Information, Communications and the Arts, given the recent merger deal between Singapore Press Holdings and MediaCorp, (a) what lessons can be drawn on the process of media liberalisation; and (b) how can it be ensured that media competition in future can succeed and result in greater product variety and better-quality journalism.

Mr Speaker, Sir, let me say from the outset that although we have given in-principle approval to Singapore Press Holdings and MediaCorp's application for merging part of their media operations, the Media Development Authority and my Ministry are in the process of examining the application and studying the details of the merger before taking a decision on formal approval.

Having said that, Sir, I now turn to the lessons that we can draw from this

experience. The aim of the media liberalisation in June 2000 was to help the local media diversify their media operations, tap the benefits of media convergence and give Singaporeans more choices in terms of TV and newspaper offerings. This was also to prepare the local media for competition in an increasingly globalised economy. As a result of media liberalisation, consumers, local production houses and advertisers have benefited from the increase in supply of media products. Compared to pre-liberalisation, Singaporeans now enjoy a wider selection of TV programmes from two additional TV channels and additional free newspapers, namely TODAY and Streats.

Sir, while competition has brought about some benefits for consumers, it has also demonstrated the difficulties faced by Singapore Press Holdings and MediaCorp when they venture into each other's traditional preserves. Competition reveals that a small media market, a limited talent pool and a small advertising pie segmented by languages are major constraints in the media environment. These constraints were exacerbated by the onset of economic downturn post-liberalisation and the consequential shrinkage in advertisement spending by companies. Furthermore, both companies resorted to aggressively bidding for imported content and undercutting each other's advertising rates. It is therefore not surprising that they suffered substantial financial losses in the midst of an economic recession. While we acknowledge that free-to-air TV services typically take several years before breaking even, we have to accept the companies' decision in not wanting to incur further losses.

The experience of Singapore Press Holdings and MediaCorp illustrates the complexity in media competition. Whilst competition may have worked well for other small countries, there is no one-size-fits-all formula for success as each

country is different. Nevertheless, we have gained a better understanding of our media environment and a greater awareness of the challenges our media players face. Our experience had helped us to draw up a media competition code which was introduced in April 2003 as "The Code of Practice for Market Conduct in the Provision of Mass Media Services".

Sir, some have attributed the failure of both companies to the lack of a media competition code from the very beginning. I do not share this view. While the media competition code could guard against anti-competitive behaviour by preventing the dominant player from gaining unfair advantage over new entrants through predatory pricing, it could not be used to micro-manage the business strategy of media companies. Thus, it would not have addressed the aggressive competition for viewers and readers adopted by the two media companies. Such behaviour is best left to the market to sort out.

Sir, on the second question concerning media competition, the Government will not reverse its policy on media liberalisation and will remain committed to allowing competition. We do not have a cap on the number of media licences. Notwithstanding MediaCorp and Singapore Press Holdings' decision to merge, the Government continues to welcome new players willing to enter the TV and/or newspaper market, if they meet the prevailing criteria for such licences.

However, I would like to reiterate that the Government cannot foster competition at all costs or ensure that every media operation entering the market will succeed. Business success will depend on the operator's entrepreneurial capability and be subjected to the discipline of market forces.

On the Government's part, we will continue to foster a healthy media

environment for the benefit of Singaporeans. We will continue to encourage the media players to strive for excellence, whether in broadcasting or newspapers. Both companies have indicated that through pooling of resources, they will be able to enhance the quality of their respective products and reach out to the regional markets. We support this strategy which can result in better media products for Singaporeans.

Sir, let me assure the Member that in considering the proposed merger, the interests of Singaporeans, who are consumers of the media services, will not be disregarded.

Supplementary question for a start, Sir.

Supplementary questions will do.

Sir, can I take it that the Minister is saying that the failure of the two media companies to compete is because of their business strategy and not because of the regulatory environment? As the Minister noted, a point which has been made is that the media competition "came very late" three years after the media was liberalised.

Ms Ng, no speeches, please. Just ask your questions.

Whereas in the telecommunications industry, it came on in the same year. Is the Minister aware that in the case of the telecommunications industry, it has succeeded in producing a better variety of service providers and products for consumers?

Ms Ng, what are your questions?

Is the Minister aware that one reason why the telecommunications industry was successful in liberalising was because of the competition code that was introduced in the same year that it was liberalised? That is my first question. My second question is: can I ask the Minister what he would like to see as a desired outcome as a result of media liberalisation, given the state of play now and the experience of the last three years? And finally, can I ask the Minister whether he thinks that the merger deal, if approved, would send the signal to new players that this is indeed a hard game to play, that even media companies with deep pockets cannot sustain it? Will it mean that, in fact, the media industry will be hampered in terms of liberalisation?

I would like to remind Members to keep their questions short, please. We have so many Questions to deal with. Dr Lee.

Mr Speaker, Sir, I have already explained in my main answer that I do not think we can attribute the failure of the broadcast and print media competition to the lack of a competition code or competition regulation right from the onset. I think it is not fair to compare the broadcast and print media to the telecommunications market. Both markets are quite distinctly different, involving different technology applications. In the case of the failure of the broadcast and the print media competition, as I have explained, one of the significant factors is the shrinkage of the advertisement pie over the period from 2000 up to now. When the media market was liberalised in 2000, the approximate broadcast advertisement expenditure was around $200 million and it was projected to increase yearly to a figure of $270 million. But we know that, in reality, far from increasing, soon after liberalisation, the amount of expenditure spent for

advertisements actually fell, and last year it was only about $180 million. So, instead of increasing, it actually fell. To some extent, the competitors adopted strategies which further undermined each other's viability by way of a "cut-throat" type of competition that certainly did not help in business viability. It is not a question of not having a competition code in place.

I would also like to remind the Member that in the case of telecommunications, the competition code came later after the market was thrown open for new entrants to the market. It was about nine months or so before the competition code was introduced. So one cannot take the approach that just because it was liberalised without an existing regulatory framework, it was doomed to failure. I think the two businesses are quite different - newspaper broadcasting versus telecommunications.

What would be the desired outcome? I think the desired outcome is for viable media companies in Singapore making every effort to constantly improve the quality of the products and also to offer a choice to consumers. Having looked back in history, the Straits Times has been the dominant English mass circulation newspaper for more than 100 years without very much competition. Did that result in the Straits Times stagnating, or the Straits Times took it upon itself as the sole player and therefore took a very relaxed approach and just dished out a low quality media product? On the contrary, although it was the dominant player, the Straits Times made every effort to constantly upgrade the quality of the product that it was offering. Not just the Straits Times alone. In fact, if you look at all of the stable of Singapore Press Holdings' publications, each one, in its own way, even before pre-liberalisation and pre-competition, was constantly making efforts to improve the quality of its products. The fact that they have won

many international awards in various media classifications or sectors shows that their efforts have been recognised. So we cannot assume that just because there is no head-on competition, companies do not make an effort to upgrade themselves. My Ministry will certainly be trying to encourage these companies, even after they have merged part of their operation, to constantly upgrade and improve the capabilities of their journalists and editorial staff so that they can produce better quality reports and better quality broadcast materials for the consumers.

Last, but not least, does the failure of this effort to introduce competition in the media market signal that there is no opportunity for media competition in future in Singapore? I would say no. We have to look at each situation on its own. We launched media competition in 2000. On hindsight, which is always a 6:6 vision, we can say that it was perhaps at the wrong timing because the regional economy and our economy went into a period of slowdown. That was not the best time. But how were we to know precisely what would happen next? We just threw open the market and let the competitors do what they think was best for their business interest. The same would apply, going forward in the future. Last year, we opened up bidding for a second pay-TV licence in Singapore. There were no takers. Does that mean that we are resigned to not having a second pay-TV operator in Singapore? The answer is no. Some time in the future, when the environment changes, when the market conditions improve, we will put the second pay-TV licence out for tender again.

Maybe then, somebody else would come in. There could be new technology available to minimise the cost of entering the pay-TV market, and somebody else might take it up and there could be competition even in the pay-TV sector. Likewise, for newspapers and broadcasting, there is always the

possibility that other players might want to enter the market.

Finally, we must bear in mind that although the broadcast market, after this proposed merger, would fall within the ambit of a single operator, MediaCorp, it does not mean that MediaCorp has the entire Singapore broadcast market on its own. It has a free-to-air channel, but do not forget that we have a digitised cable TV system in operation today which has the capability to offer anywhere between 50-80 channels. Today, I think they already have more than 40 channels available, and the offerings are continuing to increase. So our free-to-air television stations would be constantly faced with competition coming from the pay-TV sector. So they cannot relax. They have to fight this competition. They have to improve the quality of the product, the diversity of the content that they could offer in order to justify the market share. So I think we could look at this more confidently that in future, as the market for both broadcast and newspapers evolves, who knows there may be other players interested and the Government would certainly not discourage them. As I said earlier on, we do not have a cap on the number of licences that we would issue. Any player who comes along, we are prepared to consider.

Sir, the Minister mentioned that the liberalisation was introduced at a bad time because the economy was not doing well. Could I ask the Minister whether he is aware that both companies are doing very well in terms of profits and whether he thinks it is still too early in the day for both companies to be throwing in the towel?

Mr Speaker, Sir, just to correct myself, the amount of total advertising revenue for year 2000 was $200 million. For last year, it was only $170 million, not $180 million as I

mentioned earlier on. At the lowest point, in 2002, it was in fact below the $170 million mark. Now the question is whether it is too early to tell. Competition has resulted in both companies suffering severe losses. As I said earlier on in my main answer, the Government cannot foster or engender competition at all costs. The companies have to decide for themselves whether they want to carry on bleeding in this fashion, in the hope that there is light at the end of the tunnel and that they would recoup their losses sometime in the future, or they want to cut losses, rationalise their operation and carry on with a different business model. That decision is for the companies to decide. That decision is for management to decide and to answer to their own shareholders. It is not for MICA or the Government to tell the company when and how they should develop their business model, faced with these continuing losses.

Listening to the Minister's answer just now, I have one question on the role of MICA in such an eventuality where two companies, media giants, are talking about a merger. It has come across from the Minister's answer as quite a stand-offish approach. If that is so, what then is the role of MICA in discussions on possibilities of mergers?

I do not quite understand what the hon. Member meant by saying that we are taking a stand-offish approach. We are not taking a stand-offish approach. They have to submit their consolidation proposal to the Media Development Authority and the Media Development Authority would then examine this consolidation proposal, using the Code of Practice for Market Conduct in the Provision of Mass Media Services as a criterion to assess how to deal with this proposal. I do not think you can say that we have taken a completely hands-off approach. That is not a fair statement.

We would continue to regulate and ensure that there is fair competition in the media market and that if there is a dominant player, the dominant player does not use any predatory pricing mechanism or practices to prevent others from entering the market.

I would like to ask the Minister whether this merger was a directive from the Government to the media companies to merge or it was their initiative. The impression I have is that the Government had told them to just merge and not continue competing.

Mr Speaker, Sir, I think it is erroneous to conclude that the Government directed the companies to merge. The companies have to make a decision. They have to be answerable to their shareholders. It is up to them to decide. Whether they merge or not is a purely business decision. The Ministry did not tell them to merge, but I did say, if I remember correctly, on 12th November last year, when I addressed the Press Club, that we see that both companies were losing money, whether they could continue going forward at this rate of losses was a matter that they have to decide and they have to come to a decision by themselves. We have not directed the companies to merge. We have said that they have to take the decision on their own and be answerable to their shareholders. So I think it is quite wrong to say that we have, in some way, directed them to make this merger.

While the Minister has assured us that MICA would try its best to ensure that business considerations would not be the only logical reason for the merger, we also would need to protect the local news on TV, as an example, and of the need for MICA to safeguard the public interest. Right now,

we have at least coverage by two stations, but the rumour is that Channel I might be axed, and, if so, there would only be one station putting up the news, even though it has two channels, Channel 5 and CNA, to do so. We actually would lose the coverage. Would the Minister be looking into how we can safeguard the wider coverage of our local news?

Mr Speaker, Sir, MediaCorp, as the free-to-air service provider in broadcasting, would have the responsibility of providing fair, balanced, accurate and responsible coverage of local and international news. That is a given. You can take it as a given that they would continue to provide good and comprehensive news coverage, regardless of what happens to this merger.

Sir, the Minister has said that the Government has not directed the media companies to merge. I would like to know whether the Government has, in any way, influenced the decision of the media companies to merge.

Second, the Minister has said that they are private companies and they have to make their own decision. If that is the case, why is there a need for the Minister himself and some other Government leaders to speak openly about the fact that both companies are bleeding and it does not seem to be healthy to bleed in such a way?

Mr Speaker, Sir, I think I have already answered the first question. It is not different from the question raised by Mr Inderjit Singh. We have not directed them. We left it to the companies. We have not influenced them. It is a matter of business decision. The companies have to decide whether they want to continue carrying such losses and how long they can carry these losses. Obviously, management and shareholders have decided that they have to put a stop

to these losses and they have to revamp their approach to the whole business of competition.

The second point is: why should we be concerned? What we were saying, I think, were fair comments in the light of what was happening, particularly when I spoke to the Press Club on 12th November last year, because it was an obvious question begging for an answer: what was Government's position when the companies were suffering severe losses? So my answer was that: they are suffering losses as a result of the competition model that they have adopted and they would have to decide for themselves how they want to extricate themselves out of this situation.

5. Dr Amy Khor Lean Suan asked the Minister for Education (a) if he will give an update on his Ministry's implementation of the five-day work week in schools; (b) what guidelines have been issued to schools in relation to the CCA activities and the implementation of the five-day work week such that the quality and objectives of the CCA activities will not be compromised.

6. Mdm Cynthia Phua asked the Minister for Education, in view of the five-day work week, if his Ministry will consider (i) introducing full-day sessions in all schools so that the students can do their co-curricular activities and attend enrichment classes on weekdays and (ii) sharing the physical infrastructure of the schools with the community over the weekends.

Sir, may I have your permission to answer Question Nos. 5 and 6 together, please?

Yes.

Mr Speaker, Sir, the five-day work week will be implemented in all schools by January 2005. A committee, chaired by the Director of Schools, is examining the implementation issues. MOE has provided schools with guidelines to help them formulate their plans to implement the five-day work week. It has also shared examples of best practices from schools that have already been practising a de facto five-day week.

The Ministry has cautioned that the shift to a five-day work week should not overload students during weekdays. It should also not be at the expense of the breadth of educational experience that we want to provide our students, in academic as well as non-academic areas.

To make this possible, schools will seek to rationalise their programmes and look at how they can be delivered more effectively. It would mean cutting down on less effective or meaningful activities, while preserving or enhancing those that add the most value. Some JCs, for instance, intend to rationalise the number of tests they conduct in JC 1, so that teachers and students will have more time for learning and CCA activities.

Schools will look on Saturday as an opportunity for students to engage in unstructured activities, to reflect and to pursue their interests. Schools will also hold CCAs on weekends where necessary. Serangoon JC, for example, is planning to keep canoeing on Saturdays as students need the longer period of time that Saturdays allow to gain the full benefit of this CCA. Certain CCAs which rely heavily on adult or student volunteers from other schools, like some of the uniformed groups, are also likely to remain on Saturdays.

Overall, our schools are enthusiastic and committed to implementing the five-day work week well. At least 22 schools

have already implemented a five-day work week. Schools will find sensible and pragmatic ways to do so, so as not to overburden either teacher or student, while preserving the richness of educational experience they provide.

Mdm Cynthia Phua asked about single session schools in this context. All secondary schools and junior colleges are already operating on single session. Around two-thirds or 65% of the primary schools will implement full or partial single session from next year, while the rest will introduce partial single session within the next 10 years.

Mdm Phua also asked about community use of school facilities. Today, there are 310 schools which share their facilities with the community, and various groups and institutions outside school hours. In addition, MOE has been piloting a school field sharing scheme with the Singapore Sports Council (SSC) in seven schools under which the general public can book specially fenced-off school fields for recreational use outside of school hours. MOE is now working with the Ministry of Community Development, Youth and Sports (MCYS) and the SSC to expand the scheme.

Our schools support requests from the community to use their facilities as long as there is no compromise on the students' security and educational experience, which must always take precedence. Even with the implementation of the five-day work week, many students are likely to use school facilities on Saturdays. Nevertheless, it is possible that more school-based facilities could be freed up for public usage on weekends.

Sir, there are some genuine concerns from parents who work on Saturdays that their children may not use the Saturdays off meaningfully but instead they may get

into bad company, and I think there are also genuine concerns from teachers along this line too. Would the Ministry ensure that schools could organise at least some activities from time to time for such students, or at least direct them to such meaningful activities?

I think the Member's point is a fair one. We are not moving from one extreme to another. It is not a black and white situation. Saturdays are good days to organise activities for our students, whether it is CCAs or enrichment or unstructured activities. We have to do so in a way which does not mean a five-and-a-half-day work week for our teachers. So it may mean making better use of student leaders themselves, allowing more opportunity for student leadership. It may mean allowing parents and families to come in and take part in CCAs, for instance, in primary schools. Some of our primary schools are, in fact, doing this very successfully. It achieves both family bonding as well as gets the kids involved in something healthy and allows them to use their energies well. So schools will work these things out, making sure we do not overburden the teachers but using Saturdays to stretch our kids a little, engage them in something purposeful.

Would the Minister consider full-day school for our primary schools? Currently, what happens is that parents have to pay extra transport cost to and from school because most of these primary school kids are having enrichment classes as well as remedial classes in the afternoon, and this is on top of the parents having to pay for the before-and-after school care for their children. Since it is going to be a five-day work week, would the Minister seriously consider having a single session for primary school children as well?

Let me, first, say that the overall scale of

academic work, as well as non-academic work, is less intensive in primary schools compared to secondary schools and JCs. And particularly for our lower primary kids, there is not a very strong case to extend them in school throughout the day. They tire more easily. They require a little more parental supervision and home attention. Not many parents will favour a full day school for lower primary kids. But we are moving towards partial single session so as to allow, especially the upper primary kids - primary 3 to primary 6 - to have the space in the afternoons to engage in various school programmes, be it CCA or learning activities of one form or another. I think this is a pragmatic solution. The lower primary kids will occasionally do the same, but it is less frequent and less intensive.

Moving all our primary schools to single session will be very expensive as well. It means building 40 more schools, which means $800 million. And I think we can use those resources much more effectively in other areas, especially in our continual efforts to improve the quality of the teaching profession - hire more teachers, add more quality educational programmes, allow schools to build niches of excellence.

Sir, I have received feedback from some teachers who are concerned that they may not be able to enjoy this five-day week, because I think implementation has been very much left with individual principals in the schools. My question is: what will the Ministry do to ensure compliance at the individual school level? When will this five-day week be implemented in schools?

Sir, we are quite mindful of that. The basic precept of moving towards a five-day work week is that our teachers, like other civil servants, will work what I might call

a five-day equivalent week. But like in other professions, sometimes you have to work on a Saturday, and many teachers would want to do so for particular reasons. But it should not be the norm, and, in general, a five-day equivalent work week should prevail. So schools are working this out. Schools will find different ways of spreading the responsibilities of their teachers. There will be some teachers who will be a little more engaged than others on Saturdays because of the nature of the activity they are supervising. And those teachers will find that they will have lesser duties during the work week. I will leave it to schools to work out. There are several schools where I found that, in fact, a five-day week with very little activity on Saturday is workable. It depends on the nature of their activities and the profile of their students and CCA activities. So we will bear that in mind as one of our key precepts as we go forward.

Sir, I have two supplementary questions for the Minister. Following an earlier supplementary question, with regard to involvement in unstructured activities, I think, inevitably, the teaching staff as well as non-teaching staff may be involved if they are required to help to organise some of these ad hoc activities on Saturdays. In the event of this, how would the teaching and non-teaching staff be compensated?

My second question is: how can MOE more actively promote a partnership of school CCAs with the community so as to better reinforce the sharing of infrastructure facilities?

Sir, on her first question, I am not keen to encourage a culture where people clock in and clock out with some precision. Teaching is a labour of love in many ways. It requires commitment. It is a challenging profession, but you cannot mark exactly when you clock in and clock

out. It is much like many other professions. If occasionally a teacher has to do something on a Saturday because it is an activity of importance to the school - they might want the students to benefit from extra CCA training or special enrichment activity - I would not be keen to have to work out schemes of compensation. I think these things can be dealt with sensibly in the context of the school where everyone shares in the mission and shares in the objective of the school, so that teachers who put in extra effort are recognised. Sometimes they might be given time off and, at other times, their duties and responsibilities in other areas might be reduced. This is what school leadership is about. So working out a Ministry scheme would not be the right approach.

Her second question is on the community's use of facilities. It is actually proceeding quite well. We can scale it up. I think this scheme that we are working out now with MCYS and the Singapore Sports Council is a promising one. We are piloting seven schools. It is working quite well. So let us take that forward. I do not see major systemic impediments to this. It is a practical issue. We could deal with security and we have got to ensure that there is absolutely no compromise on our students' educational experience - the fact that they have got to have those facilities available to them when the school decides they are necessary.

Sir, with regard to the Minister's answer that the philosophy of teaching is a service of love, I certainly support. I am just wondering whether the Minister has gotten the support and understanding of the teachers' union in this respect.

Sir, it is still early days. We are working this out. We have a committee chaired by the Director of Schools, and schools are currently working out their plans for

implementation. The starting position is one of shifting activities from Saturday into the weekdays. But I do not want to constrain schools at this point from having some use of Saturdays for certain activities where they think practical. Let us see what they come up with. The Ministry will have a look at their plans and ensure that the principle of not over burdening teachers and ensuring that teachers have a five-day equivalent work week is maintained.

7. Mdm Ho Geok Choo asked the Minister for Manpower (a) what is the rationale for the implementation of the recently announced Employability Skills System (ESS); and (b) how can it be ensured that this new framework that costs $900,000 will be effective in facilitating the unemployed and workers at risk of displacement in their search for jobs.

Sir, employability skills refer to the generic or foundational skills that every worker should possess. They include literacy, being able to communicate effectively, as well as to use information communication technologies (ICT), identify and solve problems, adapt to changes and so forth. These foundational skills are distinct from occupational or technical skills. However, employers recognise them as equally important to workplace effectiveness.

WDA has, in consultation with employers and industry partners, mapped out the sets of employability skills that are relevant and useful. These will be particularly helpful in raising the employability of the lower skilled workers. For example, without workplace literacy, it would be very difficult for the lower skilled worker

to learn new occupational skills to take on a new job. In other words, some workers may not be literate enough to read instruction manuals for new machines in the workplace. The customised training does not aim to help them read widely but focuses on their ability to read relevant instructions at their work to upgrade themselves.

Apart from setting out the key employability skills, the ESS comprises appraisal tools that enable career counsellors, employers and training providers to identify the competency gaps of job seekers and employees. The results are used to determine the type of training required for the worker. After training, the competencies of trainees would be re-assessed and they will receive certification as evidence of their new skills acquired.

The system is currently being piloted and 15 training modules will be fully implemented from January 2005.

Sir, I would like to ask the Senior Parliamentary Secretary who were the employers and industries that were involved with WDA in this project, and how were they selected. What are some of the workforce development best practices around the world on which this particular model was supposed to have been benchmarked against? Can the Senior Parliamentary Secretary enlighten the House as to what are some of Singapore's workforce specific development needs? And how are these needs being addressed by this particular programme?

Sir, the WDA has conducted focus group discussions on employability skills as well as conducted surveys involving more than 450 respondents and 43 participants. They

come from different industries and sectors. The list is long. I would not bore Members with the full list. They include 77th Street (Singapore) Pte Ltd, A&P Maintenance Pte Ltd, and they come from all industries and sectors.

On employability skills that we are focusing on, we taught about 10 employability skills, in particular, eg, workplace literacy and numeracy, information communication technologies, problem solving and decision making, initiative and enterprise, communications and relationship management, life-long learning, global mindset, self-management, work-related life skills, health and workplace safety. These are areas in which we expect every worker to have some knowledge in and some competency so that they can learn better and contribute better to the companies.

In benchmarking ourselves, we have taken a look at practices in many countries. We have taken a look at the Australian Business Council's employability skills standards. We have also taken a look at the Conference Board of Canada on employability skills 2000 plus the UK's Qualification and Curriculum Authority's key skills and the practices in the United States. All I can say is that we have taken a look at the best practices in the various countries and have come out with the 10 employability skills that we think would be very useful for our workers.

What is also important is that we have reached out to companies and training providers to find out what are the relevant employability skills that they think their workers and our workers would need. So we have come out with a set of 10.

Sir, I would like to ask the Senior Parliamentary Secretary how the outcomes of the trainees are to be measured. Eventually, who will actually be measuring these outcomes?

It is early days yet, Sir. We are still piloting it. We have just started. We will do this until the end of the year and we will roll out the whole scheme in January 2005.

Workers who undergo the employability skills training will be assessed before their training starts and at the end of the training course. This will be conducted by the trainers.

8. Mdm Cynthia Phua asked the Minister for Health (a) what are the guidelines for medical practitioners who retail health food and supplements on a franchise basis; and (b) whether shops and clinics involved in multi-level marketing of medical and health products must seek prior approval or register with a medical watchdog body.

Mr Speaker, Sir, multi-level marketing (MLM) is not illegal. However, under the Singapore Medical Council's Ethical Code and Ethical Guidelines, a doctor's non-medical business must be clearly separated from his medical practice and his medical qualifications so that the public is not misled into believing that the non-medical product or service is medically beneficial or is being endorsed medically.

It is also stated in the Ethical Code and Ethical Guidelines that a doctor must not exert undue influence upon a patient in relation to transactions in which he has an interest. He must not let financial considerations influence the objectivity of his clinical judgment in the treatment of his patients.

The Ministry of Health (MOH) had in September 2004 sent out a circular to doctors reminding them that the doctor-patient relationship is one that is based on trust and that doctors should adhere to the ethical code governing the profession.

Any complaint against a doctor for breaches of SMC's ethical code and guidelines will be investigated by the Medical Council.

9. Dr Amy Khor Lean Suan asked the Minister for Health (a) if his Ministry will be reviewing the eligibility criteria for Medifund along with the MediShield revamp; and (b) what are the justifications for his Ministry's decision to review or not to review the criteria.

Sir, Medifund is to help needy Singaporeans pay for their medical care. It is an important component of our medical safety net.

The main operating principle is to ensure that financial assistance goes to the deserving cases. Patients in need are assessed locally at the hospitals or nursing homes by the respective Medifund Committees. These committees comprise experienced individuals drawn from the community.

While there are general guidelines, each patient is assessed on his own merit. Typically, the Medifund Committee will take into account factors such as the patient's financial background, the size of the medical bill, and whether the treatment is likely to be prolonged. Each committee has considerable leeway to decide if a patient warrants the assistance, and, if so, the extent of the assistance.

My Ministry consults periodically with the Medifund Committees, and will adjust the guidelines when necessary. Whether the proposed MediShield reform will require a revision of the Medifund guidelines will depend on the nature of the MediShield reform. We will only know this later when the reform is finalised.

May I ask the Minister whether there has been an increased number of applications for Medifund over the years? Will this trend be progressively going upwards with time and an aging population? Has the disbursement so far been from money derived from the interest on the capital of Medifund only or it is already involving the principal of Medifund as well? Will this capital be further topped up to cope with the increasing demand?

Sir, the trend is indeed a rising one, because, firstly, the population is expanding and, secondly, aging. So, the number of admissions goes up and the number of applicants who require assistance also goes up.

As to whether we have dipped into reserve fund, we have not. It is an endowment fund. So the Committees have been quite prudent. But we do not really put an upper bound to the number of applications. It is all subject to the market. And, so far, I am quite satisfied. I look at the data periodically. The applicants who applied are not 100% approved. I would be troubled if every application is simply approved. Then it becomes like a cash grant. There have been some rejects, but not that many. And I think the Medifund Committees have been quite responsible.

As for growth of the Medifund itself, that depends on the economic growth. As and when there is strong economic growth, my Ministry will certainly try to make a bid for an increase in the

Medifund. And I succeeded this year. So there is an increase of 10%, by $100 million, to now $1 billion.

Sir, while the Minister has noted that there are no fixed criteria, but, as regards the income level, is there any ceiling on a per capita basis for applicants? Because as the size of medical bills increases, say, for people with critical illness, the sandwich class - people with income of $2,000 and above - may have problems footing the bills.

We have a choice of model. We can have very tight criteria and then we leave the hospital or nursing home committees very little leeway. But my preferred approach is we keep the guidelines loose, and then we let maximum flexibility on the ground. That is my preferred arrangement.

Of course, there are some simple rules. One, only citizens need apply. So, if you are a non-citizen, sorry, you are out. Two, it is very hard to judge who is poor and who is rich. If you earn $10,000 a month, please do not bother to apply. But whether you stay in a private property or a 3-room HDB flat, that depends. In my constituency - I just did a house-to-house visit - we have quite a number of old walk-up apartments. Look at their conditions - furnishing and so on - I think many of my constituents in 3-room flats fare much better. So, obviously, deciding on who deserves help and who does not is quite an art. It can never be strictly mathematical. And I think the best is to make sure we have good sensible people who are able to decide on each application both with the heart as well as the head.

10. Mdm Halimah Yacob asked the Minister for Health whether centralising

the provision of podiatry services for diabetics under one centre will affect convenience, accessibility and affordability for the elderly who frequently use the services.

Mr Speaker, Sir, diabetes is a common problem among Singaporeans. About 9% of our adult population is diabetic.

To prevent foot complications, the blood sugar level must first be controlled. Doctors treating diabetics need to advise their patients to look after their feet carefully and take any complaints related to the feet seriously. The diabetics must then learn proper daily foot care. Foot screening and assessments are currently provided by trained nurses at our polyclinic.

These trained nurses are able to assess and educate on preventive measures, as well as provide treatment for our diabetic patients. Sometimes, patients develop complex ulcers and would require more specialised foot care. A podiatrist would then be needed. At other times, the problem may be even more complicated, and would need the expertise of an orthopaedic surgeon. Hospitals have podiatry and orthopaedic services.

The National Healthcare Group started a pilot project two years ago for podiatry service to be provided at its polyclinics. NHG polyclinics believed that the service would be cost-effective because they believed that they could market such services to the general practitioners. To introduce and popularise the service, they decided to charge the service at less than what it actually cost. However, despite this, the response was poor. The project ended in September 2004.

Podiatry services will continue to be available in the hospitals. Our hospitals

and polyclinics will continue to pilot projects that try out new ideas.

Sir, the Senior Minister of State said that one of the reasons why services are terminated at the polyclinics is because the response has been poor. I would like to ask the Senior Minister of State whether a survey has been done on why the people are not making use of the podiatry services at the polyclinic level. Is it because they are ignorant of the presence of such a service being provided at the polyclinics?

My second question, Sir, is whether cost-effectiveness should be the only criterion and basis in determining whether such a service should be provided at the polyclinics, bearing in mind that issues of convenience and accessibility are also essential, as such services are largely made use of by elderly people who may find going to the hospitals a lot more of a hassle for them.

Sir, we allow our clusters and hospitals to decide where to place services so that they can provide the services as efficiently as possible. For a podiatry service to function, it requires a certain critical mass of patients to come to that centre so that the service can be provided efficiently. When NHG decided to start podiatry service in one of its polyclinics as a pilot project, they made an assumption that there would be a majority of patients coming from general practitioners and others who referred their cases to their polyclinics. But it turned out that less than 1% of the patients seen at the podiatry clinics were cases referred to the polyclinics. This was despite the fact that they charged $8 for the podiatry service to try to popularise their service while other centres, like the NKF prevention centres, charged $25. They originally had planned to charge $20 for the service. But they brought it down to $8 to see if there was a demand for the service.

So, if a service is not efficient and cannot be provided efficiently because the numbers are not there, then we allow our clusters to organise them in such a way that a critical number of patients are there. Currently, the podiatry services are in the restructured hospitals and if patients need these specialised services, they are referred to the hospitals. However, all our polyclinics still have nurses who are trained in foot care, which means that routine foot care for most diabetic patients would be looked after in the polyclinics. Only the specialised cases would go to the hospitals.

Sir, I was told that in Geylang Polyclinic, they also provide podiatry services and they have been very well utilised. In fact, the frequency, in terms of podiatry services being provided, has to be increased. That suggests that such services are needed at the polyclinic level. Therefore, my question is: what are the reasons for the services not being well used in the other polyclinics? Has the Ministry made an attempt to find out the reasons? Is it because it is not well advertised?

My second question is this. The Minister recently said that as far as possible, we should try to keep people away from hospitals, suggesting that there should be more comprehensive services at the polyclinics. Is this decision then to centralise podiatry services at the hospitals a contradiction of this expressed policy?

The hon. Member may be mistaken. It is not a decision by the Ministry to centralise services. We are open to the clusters should they want to provide a service in the polyclinics if they think it makes economic sense for them to provide that service, if the numbers are there to justify it. So, should NHG again look at these numbers and

want to try some other pilot projects where it can move services down to the polyclinic level, at Ministry level we will support it. And as a philosophy, we believe, as far as possible, we should bring services to as close to the patients as possible.

But this was a pilot project. A pilot project is a project that tries out new ideas to see if it works. In this particular case, NHG reported that the idea did not work. They have, therefore, stopped the project. They can review the project again. And if they think that there need to be changes before they introduce it, we will not stop them. But we do not micro-manage these services at the cluster or the hospital level. We leave it to our clusters and hospitals to decide how and when to best place services.

Mr Speaker, Sir, the Senior Minister of State mentioned that actually the prevalence of diabetics is 9%, which means almost one in 10 Singaporeans in the community actually has diabetes. So I am very surprised to hear that there is no demand at the community level for these podiatry services.

The reason is that GPs are not referring cases to the polyclinics for diabetic foot care. Then should NHG find out what are the reasons GPs are not referring the cases to them? Is it because GPs are not aware? Or is it because the diabetic patients are not aware of the services? Or is it because GPs are afraid that when they refer cases to the polyclinics, the patients get snatched away by the polyclinics and they lose the patients?

I do not think that is the mental thinking of our practitioners. But what you have to understand is that there is a gradation of care. Things that are complicated are often seen by an orthopaedic surgeon. Things that are

simple are often seen by the general practitioner. And in the same way, in the nursing care, nurses trained to look at diabetic feet take care of a lot of simple problems. When something is very complicated, like if there is a diabetic ulcer, then an orthopaedic surgeon would see it and would often get a podiatrist to look at the foot. And this is how care has been provided for many, many years. The innovation is taking the podiatrist who usually looks after complex problems and putting the podiatrist in a position where there are common problems, that means, normal uncomplicated feet are being seen. So, although 9% of adult Singaporeans may be diabetics, it does not mean that 9% of Singaporeans are walking round with a diabetic ulcer. So should we take someone with this additional skill and put him in a polyclinic setting to look at problems that may not require that degree of expertise? Because the skills of podiatry are between the skills of an orthopaedic surgeon and that of a trained nurse who looks after diabetic foot problems, the exact definition of where their skill should start and where their skill should end is not clearly defined.

So in providing this service, trying to define where the podiatry service should be, is a new idea. It is a new innovation. So that is why it is a pilot project. And in the whole scheme of things, it appeared that the general practitioners and the other polyclinic doctors did not see the need for it, that is, if they thought a problem was going to be a little bit more complicated than what they usually look after, they would rather send him to an orthopaedic surgeon to look at the foot and have the podiatrist see with the orthopaedic surgeon, rather than sending the patient to the podiatrists. So these are the details of medical practice that are best managed by people on the ground who know these things and will decide how to site these services better so that the patients get the best care, and ensure that is also provided in the most cost

efficient manner. And this is something that is better done at that level than at the Ministry's level with the Ministry dictating that resources be placed at a physical location based on a theoretical model.

Last supplementary question on diabetes. Mdm Halimah.

Thank you, Sir. The Senior Minister of State says that this is a matter that should be decided by NHG cluster, and not a matter for the Ministry to decide, as a matter of policy. At the same time, we also know that the Ministry has a policy that, as far as possible, people should be kept away from the hospitals, services should be consumed at the community level. So my question is: how does the Ministry then ensure consistency between what the clusters do, podiatry may be one service, and its overall policy on the manner in which healthcare is to be provided?

Sir, we encourage our clusters and the hospitals to move as many services as possible to the outpatient level. For example, there is going to be a pilot project to bring chemotherapy to the outpatient level. It is a pilot project because we do not know whether it is the best thing to do. Chemotherapy involves giving very strong drugs. There may be complications from it. There may be a need for other special services that the patient needs suddenly because he is getting chemotherapy. On paper, it looks like it is a project that could work and be tried out. But suppose we have chemotherapy services in the polyclinics and patients do not want the polyclinic chemotherapy because, every time there is a problem that they have to, besides going to the polyclinic, get referred to the hospital. And let us say, it happens once in three times, the patients may decide to have their treatment at a hospital setting than in a polyclinic

setting. So to see whether such things would happen, we would run a pilot project.

When you run a pilot project, you must run it with an open mind, not on the basis that if I start a pilot project, its conclusion must be what I have decided at the start of the pilot project. So with podiatry service, it was a pilot project and the conclusion that was decided at the end of the pilot project was that it was not a good way of providing the service. So they have reverted to the previous way that they ran it. They may relook at it and see if they can better reorganise the foot services for diabetics, and we would encourage it. As a philosophy, we encourage our hospitals and clusters to bring as many services as possible as close to the polyclinic level and as close to the patients as possible.

11. Dr Teo Ho Pin asked the Minister for Trade and Industry (a) whether his Ministry has taken measures to ensure that fair trading is being practised in the sale of chicken and eggs between traders and consumers; and (b) what enforcement measures are being taken to check against profiteering.

Mr Speaker, Sir, as with all commodities, the prices for eggs and poultry reflect market forces of demand and supply. The suspension of the import of poultry and eggs from Malaysia on 18th August following the bird flu outbreak in Kelantan had resulted in a significant reduction in the supply of these items in our market. This is because Malaysia supplied about 50% of chickens and 70% of eggs

consumed in Singapore. Inevitably, the prices of chickens and eggs rose. The price of chicken increased (by about 50%) from $4.62 per kg before the ban to a peak of $7 per kg, while the price of egg rose from 16 cents to 55 cents.

To ease the supply shortfall, AVA worked closely with importers and wholesalers to increase the import of frozen poultry, eggs, as well as powdered and liquid eggs from alternative approved sources. AVA also worked closely with Malaysia's Department of Veterinary Services (DVS) to resume the import of poultry and eggs from Johor and Malacca, without compromising public health. The imports from Johor and Malacca resumed on 30th September. This has eased the supply situation and moderated the prices of chicken to $5.17 per kg and egg to 26 cents.

The making available of more supplies and market competition will greatly diminish any opportunity for profiteering. Consumers can also play their part to combat any tendency towards profiteering by switching to other food products, as well as not purchasing from vendors who charge excessively. Consumers who have encountered such an opportunistic pricing practice by egg and poultry traders can lodge their feedback with the Consumers Association of Singapore (CASE). CASE can also help to publicise this so as to put pressure on such traders.

12. Dr Amy Khor Lean Suan asked the Prime Minister and Minister for Finance whether there are any plans for greater disclosure of the returns on Government-managed assets to enable the public and the market to have a better picture of the performance of such investments.

Mr Speaker, Sir, disclosure of the exact size of, or the returns on, Singapore's financial reserves will not be in Singapore's national interest. The reserves managed by the GIC exceed US$100 billion. Reserves are important for maintaining confidence in, and discouraging speculation on the Singapore dollar. While market players do not doubt that Singapore has substantial resources to defend the Singapore dollar, they do not know the exact amounts nor full details of the asset allocation nor the investment criteria. Publishing this information would make it easier for speculators to plan their attacks on the Singapore dollar.

Two supplementary questions for the Minister. How can the Government actually strike a balance between transparency and the need to protect our currency from speculative attack? In an era of liberalisation and transparency, how strong and relevant are Minister Mentor's two previous observations on this subject? One is about the unflinching integrity that stands at the core of our GIC, and two is that there is a system of checks and balances within the Government to keep the GIC in line.

The two questions are actually one question because the Member posed the first question and she has answered it with the second question with what Minister Mentor had said in the past. What he said remains relevant. The key issue here, like she has correctly pointed out, is how do you ensure accountability. Accountability here is ensured by having the GIC's management directly accountable to the GIC board. And this board comprises prominent public and private sector individuals and has to be approved by the President. So, within the system itself,

there is an institutionalised mechanism to ensure the integrity of the process.

I would like to ask the Minister whether we are the only country that adopts such an accounting approach where capital receipts are excluded from our budget balances, and whether we could, by pursuing this approach, be more tightfisted than we ought to be when providing a stimulus package to help individuals and businesses during an economic downturn.

The reason why we have adopted this particular definition of how we account for our operating budget, which we take basically the operating revenue and the operating expenditure and we take out the capital receipts, is because the capital receipts are non-recurring. So it is not a stable source for us to rely upon. The other question that she asked is whether we could have done more to cushion an economic downturn. We have done so. In the past few years, during the economic slowdown, the Government had been willing and quick to respond with assistance packages, run budget deficits in order to help Singaporeans, households, businesses, to tide over the economic downturn. And these packages are quite substantial. If you look at 2001, it was close to $13.5 billion, two off-budget packages. In 2003, SARS, $1.2 billion. And, recently, when we had Avian flu and we banned the import of poultry from Malaysia, Government agencies were quick, as Members are aware, to provide relief to egg sellers, poultry sellers and slaughterhouses.

But what is really more important and the fundamental question here is: why is it that Singapore is in a position to run budget deficits when there is an economic slowdown, not just for one year but a few years, without, unlike some other countries, undermining the general market

confidence in Singapore's macro economic stability, without negative knock-on effects on inflation or interest rates in the economy? The reason why we have been able to do this is that we have consistently and strictly adhered to a policy of fiscal prudence and fiscal discipline. And this means running a balanced budget over the business cycle and accumulating surpluses in good years so that you are in a position to spend in difficult times. And it is this policy of a sizeable reserve and a reputation for fiscal discipline that allow us room to help Singaporeans, as individuals and households, during difficult times.

Sir, will the Minister please enlighten this House as to how the selection of prominent members to the board itself give the public the assurance that the Government will ensure maximum return on its investments when it is managing the public funds?

One minute left.

As I said, these individuals are prominent individuals in the public and private sectors. They are on the board of GIC. They are given full access to the information on the performance of the funds, and the funds are benchmarked against the investment mandate. It is important to set out what is the investment mandate, and the principal mandate of GIC is to maintain and enhance the value of our reserves over the long-term, because this underpins confidence in the Singapore dollar. Against that benchmark, GIC has given us good returns over the long-term and performed creditably against international benchmarks like the MSCI equity indices, the Lehman Bond Index and against major international fund houses.

3.00 pm

Order. End of Question Time.

[Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 16-18, 20 and 21 on the Order Paper are reproduced in the Appendix*. Question Nos. 13-15, 19 and 22 have been postponed to the next available sitting of Parliament.]

*Cols.971-978

"to amend the Securities and Futures Act (Chapter 289 of the 2002 Revised Edition)",

presented by the Minister for Education (Mr Tharman Shanmugaratnam); read the First time; to be read a Second time on an available sitting after 30th November 2004, and to be printed.

"to amend the Financial Advisers Act (Chapter 110 of the 2002 Revised Edition)",

presented by Mr Tharman Shanmugaratnam; read the First time; to be read a Second time on an available sitting after 30th November 2004, and to be printed.

"to amend the Copyright Act (Chapter 63 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 Electronic Transactions Act (Chapter 88 of the 1999 Revised Edition)",

presented by the Minister for Information, Communications and the Arts (Dr Lee Boon Yang); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Broadcasting Act (Chapter 28 of the 2003 Revised Edition)",

presented by Dr Lee Boon Yang; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Immigration Act (Chapter 133 of the 1997 Revised Edition)",

presented by the Senior Minister of State for Home Affairs (Assoc. Prof. Ho Peng Kee); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to corporatise the Commercial and Industrial Security Corporation by providing for the transfer of the assets, rights, liabilities, employees and undertaking of the Commercial and Industrial Security Corporation to its successor company, and for the consequent dissolution of the Commercial and Industrial Security Corporation and for all matters connected therewith; and to repeal the Commercial and Industrial Security Corporation Act (Chapter 47 of the 1998 Revised Edition) and to make consequential amendments to certain other written laws",

presented by Assoc. Prof. Ho Peng Kee; read the First time; to be read a Second time on an available sitting after 30th November 2004, and to be printed.

"to amend the Merchant Shipping Act (Chapter 179 of the 1996 Revised Edition) to

give effect to the Convention on Limitation of Liability for Maritime Claims, 1976, and for matters connected therewith",

presented by the Minister for Transport (Mr Yeo Cheow Tong); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to facilitate payments for construction work done or for related goods or services supplied in the building and construction industry, and for matters connected therewith",

presented by the Minister of State for National Development (Mr Cedric Foo Chee Keng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the planting, maintenance and conservation of trees and plants within national parks, nature reserves, tree conservation areas, heritage road green buffers and other specified areas, and for matters connected therewith; to repeal the Parks and Trees Act (Chapter 216 of the 1996 Revised Edition) and to make related amendments to the National Parks Act (Chapter 198A of the 1997 Revised Edition)",

presented by the Second Minister for National Development (Mr Lim Swee Say); read the First time; to be read a Second time on an available sitting after 30th November 2004, and to be printed.

"to amend the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 2001 Revised Edition) and to make a consequential amendment to the Income Tax Act (Chapter 134 of the 2004 Revised Edition)",

recommendation of President signified; presented by the Senior Minister of State for Trade and Industry (Dr Vivian Balakrishnan); read

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

"to amend the Countervailing and Anti-Dumping Duties Act (Chapter 65B of the 1997 Revised Edition)",

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

"to amend the Income Tax Act (Chapter 134 of the 2004 Revised Edition)",

recommendation of President signified; presented by the Acting Second Minister for Finance (Mr Raymond Lim Siang Keat); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Goods and Services Tax Act (Chapter 117A of the 2001 Revised Edition)",

recommendation of President signified; presented by Mr Raymond Lim Siang Keat; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Stamp Duties Act (Chapter 312 of the 2000 Revised Edition)",

recommendation of President signified; presented by Mr Raymond Lim Siang Keat; read the First time; to be read a Second time on an available sitting after 30th November 2004, and to be printed.

"to amend the Estate Duty Act (Chapter 96 of the 2001 Revised Edition)",

recommendation of President signified; presented by Mr Raymond Lim Siang Keat; read

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

"to amend the Property Tax Act (Chapter 254 of the 1997 Revised Edition)",

recommendation of President signified; presented by Mr Raymond Lim Siang Keat; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Appraisers and House Agents Act (Chapter 16 of the 2000 Revised Edition)",

presented by Mr Raymond Lim Siang Keat; read the First time; to be read a Second time on an available Sitting after 30th November 2004, and to be printed.

"to provide for limited liability partnerships and to make consequential amendments to certain other written laws",

presented by Mr Raymond Lim Siang Keat; read the First time; to be read a Second time on an available sitting after 30th November 2004, 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."

Overview

Sir, Members of this House will recall that earlier this year, we enacted four Bills relating to trade marks, patents, copyright and new plant varieties, to ensure that we meet the needs of the new industries we are grooming, as well as remain competitive in this fast changing IP landscape. The proposed changes relating to the Registered Designs (Amendment) Bill represent one more aspect of our continuing efforts to strengthen Singapore's intellectual property (IP) legislative framework.

Sir, these amendments were put up for public consultation for about two weeks in August. We did not receive any comments.

Singapore has seen an increasing number of design applications and registrations since we enacted the Registered Designs Act in 2000. To continue to encourage Singapore-based design owners to protect and exploit their intellectual assets, it is timely to review the Act to keep pace with international and domestic developments.

Sir, these proposed amendments will benefit design owners in two ways. Firstly, design owners seeking to protect their designs in different countries will now have an easier route to register their designs in other jurisdictions. Secondly, design owners who are also seeking other forms of IP protection can do so more easily as common practices and procedures will be aligned across the different registries of the Intellectual Property Office of Singapore (IPOS),

namely, the Registries of Trade Marks, Patents, Designs and Plant Varieties.

Let me elaborate briefly on these amendments.

Making it simpler to register a design in other jurisdictions

As we encourage our Singapore-based design owners to expand their businesses and venture into markets outside Singapore, we should ensure that they have a convenient avenue to obtain protection for their designs in these overseas markets. Currently, a design registration in Singapore, like the registration of other forms of IPs, only gives the owner protection within Singapore. If a design owner wishes to seek protection in another country, he has to file separate applications in each of the countries where he has a commercial interest, thus incurring additional costs and waiting time. If he chooses to file in five other non English-speaking countries, there is the further expense of translation costs.

To simplify the process of obtaining design protection in overseas markets, we propose that Singapore become a contracting party to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (the "Hague Agreement"). As a member of the Hague Agreement, our design owners who are seeking protection in the other member states would only need to file a single application with one office in one language, and pay only a single set of fees in one currency. Our design owners will thus be able to cut down on time and costs when seeking design protection in overseas markets. The accession to the Hague Agreement will also allow Singapore to fulfil our obligation under the Free Trade

Agreement with the European Free Trade Association States.

According greater administrative ease for IP owners who apply for different forms of IP protection

Sir, the other set of amendments to the Registered Designs Act will assist IP owners in the registration of their IPs at IPOS. This is done by aligning the provisions of the Act relating to priority dates, hours of business and amendments to the forms with equivalent provisions of IPOS' other registries. This is important for an IP owner because IP is usually a bundle of rights. For example, an IP owner may have a patent grant for his invention, a design registration for the 3-dimensional shape of that invention, and perhaps even trade mark registration for the owner's mark applied onto that invention. The alignment of these provisions will make it easier for the IP owner to file all his applications.

In conclusion, Sir, this Bill will enhance our designs regime, and make it easier for our local design owners to protect their intellectual assets.

Sir, I beg to move.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee].

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

Order for Second Reading read.

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

Sir, the present Bill is the result of an extensive review to update and modernise our Trustees Act. The review is part of our broader objective to enhance Singapore's position as a leading financial and wealth management centre.

The present Trustees Act, when first enacted, was to provide essentially a legislative framework for domestic trusts. However, if we are to succeed in enhancing Singapore's position as a leading financial and wealth management centre, it is essential that we modernise our Trustees Act to be in tune with current developments in trust law and the application of trusts in financial and business transactions in the commercial world. It will enable our banks to provide a full range of banking products and services using trust concepts to sophisticated high net worth individuals from around the world. A vibrant onshore private banking market will enhance Singapore's reputation as a wealth management centre, anchor foreign private banking operations here, and broaden and deepen our financial and capital markets.

In the review leading to this Bill, the Ministry of Law and the Monetary Authority of Singapore conducted extensive consultations. We received feedback and suggestions from investment advisers and managers in the trust industry, the Law Reform Committee of the Academy of Law, the Law Society of Singapore, experts from the NUS Law Faculty, and relevant Government agencies.

Sir, trust law can have wider application and be more versatile than commonly appreciated. Trusts are not confined just to wills and family settlements. They also have considerable and increasing relevance to global investments and to the management of private capital and savings. Trusts are able to separate ownership from management and create different levels of beneficial ownership of assets that provide the desired flexibility in the management, control and ultimate distribution of private wealth. They can also provide a degree of confidentiality that is desirable for the preservation and protection of private wealth. High net worth individuals favour private trusts for a variety of uses, for example, to provide for incapacitated persons, to protect family and property from spendthrifts, and to manage the centralisation and coordination of worldwide assets. Indeed, a recent Business Times' article reported that more Singaporeans, and not just high net worth individuals, are considering putting their assets into trusts.

Our legislation on the law of trusts has not kept pace with the developments in other countries that have seen an increasing use of the trust institution to manage private wealth, especially in the area of trustees' powers and duties. Trustees' powers are normally provided for in the trust instrument, but equally important are the default powers provided by statute. Under the present law, these default powers are geared to the management of traditional domestic trusts rather than "international trusts" that deal with worldwide assets. They are too conservative and do not provide for the sophistication and flexibility that are required for modern and international trusts. This is especially so in the global investment and financial markets of today, where conditions change rapidly, and it is not possible for a trustee to possess all the required expertise and

experience to effectively perform all the functions personally.

Sir, let me explain some of the main changes.

One major change that this Bill seeks to introduce is the expansion of the discretionary powers of trustees, to enable them to manage trust assets in the most effective way, for the benefit of the trust. This will be achieved through various reforms, including the conferment of a general power of investment, and the power to appoint agents, nominees and custodians.

Sir, under the current Trustees Act, a trustee can only invest in accordance with a list of authorised investments set out in the Act, unless the trust instrument expressly provides otherwise. While this approach may have assisted trustees in the past, it unduly restricts them from optimising investment opportunities, especially in today's financial market where conditions change rapidly. It could also result in a false sense of security and lower the standard of care in the determination of suitable investments for the purposes of the trust. We should leave investment decisions to suitably advised trustees. This Bill therefore repeals the list of authorised investments and a trustee can now invest as he would his own funds.

At the same time, there will be safeguards to ensure that trustees adhere to certain minimum prudential standards when they exercise their trustee powers. A duty of care will be defined for trustees when they carry out specified duties or acts. In certain circumstances, for example, in making investment decisions, they will be required to obtain proper advice.

On other changes, most of the amendments sought to be made by the Bill are highly technical in nature and I do not intend to dwell on each of them at

length. But let me highlight some of the other more significant changes to the Act.

First, the validity of certain trusts. Clause 21 inserts a new section 90 which seeks to provide certainty on the validity of dispositions of movable property by a foreign person into a Singapore trust, ie, a trust subject to Singapore law. This is a desirable feature to give certainty to the settlor's intentions as the validity of such dispositions by a foreign settlor may otherwise be governed by the law of his domicile which may have given a different outcome to that he had intended when setting up the Singapore trust. This section will provide certainty by specifying statutory rules to determine the capacity of the foreign person to create the trust or transfer the property to be held on trust.

For example, some civil law countries have rules that restrict an individual's freedom to dispose of his assets during his lifetime. In pursuing their own policies, these countries may apply these rules even when the assets in question are validly transferred under the law of the country that the assets are situated. Section 90 will provide certainty as to the validity of such transfers into Singapore trusts. This is achieved by recognising the individual as having the required capacity to transfer the property if the transfer is valid under Singapore law, his own personal law, or the law governing the transfer. Sir, this is not an unusual provision for even non-civil law jurisdictions have a similar provision such as that found in the Labuan Offshore Trusts Act of 1996, a Malaysian legislation.

Next, on accumulation of income and fixed perpetuity period, clause 24 will make significant changes to our laws on the accumulation of trust income and the perpetuity period. These changes are

effected under the Civil Law Act as the rules are not confined to trusts. These amendments will simplify the law in this area and, at the same time, bring certainty to the periods of time within which income from trusts may be accumulated and future trusts may be validated.

Let me say that in the context of the Trustees Act, trustees of new trusts will be able to accumulate trust income for the duration of the trust. This is currently not allowed and trust income may only be accumulated for prescribed periods. Sir, the principle against the excessive accumulation of income dates back to the 1800 UK Accumulations Act and it has been heavily criticised as having no relevance today. Many states in Australia, Canada and the United States have abolished this archaic rule. In the UK, the Law Commission has also recommended the abolition of this rule.

Next, the Bill will reform a complicated common law rule that requires future interests in property to vest within a "perpetuity period", if they vest at all. The period is measured by reference to "lives in being" plus 21 years at the relevant time. There are complicated rules for determining the relevant lives. Sir, not only is this rule complicated for lawyers and judges, it can frustrate the intention of the person creating the trust. For example, a gift is void if it might vest outside the relevant period of time, and a party other than the intended beneficiary may then become entitled to the property.

In our consultations, there was overwhelming support for the replacement of the common law perpetuity period with a fixed period. This Bill therefore will replace the common law way of determining perpetuity period with a maximum fixed perpetuity period of 100 years for new trusts.

Sir, with expanded investment powers for trustees, and the repeal of the

authorised investment list, there is no longer a need for unit trust schemes to be authorised under the Trustees Act. The Bill therefore abolishes the existing authorised unit trust scheme and any order that was made declaring a scheme to be an authorised unit trust scheme shall cease to have any effect. But let me stress and clarify that the revocation of the "authorised" status under the Act does not in any way diminish the investment value of these unit trusts.

Let me now touch on clause 25 which will make related and consequential amendments to the investment powers of more than 50 statutory bodies. Currently, Sir, the investment powers of statutory bodies may vary, depending on when they were established. Older provisions are more conservative, and tend to be linked to the Trustees Act, which means that the statutory bodies have to invest according to the list of authorised investments under the Act. With the expansion of the trustee's investment powers, and the abolition of such a list, we have reviewed the position. The Bill now generally seeks to align the investment powers of statutory bodies with a standard provision that gives them sufficient flexibility and autonomy to make their own investment decisions under the oversight of their supervising Ministers.

In conclusion, Sir, let me say that my Ministry was greatly assisted by the very constructive and useful comments given by those who responded to the consultation exercises that we conducted. These changes through this Bill will strengthen our legal framework for trusts, and help to further enhance our attractiveness as a financial centre for wealth management.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, I would like to support the Trustees (Amendment) Bill. I would just like to make a few comments.

About three years ago, the Economic Review Committee identified wealth management as an area of potential growth for Singapore in terms of our financial services industry. And it also recommended that the legislation be updated because it is really quite old, going back to the 1920s, and it has not been significantly revised since that time. So the Trustees (Amendment) Bill is quite welcome by the financial services industry. It is a very important industry, it is vibrant. It is constantly innovating and evolving and also it is getting more complex by the day. So the law is always having to catch up with it, so to speak. But that said, we cannot avoid the pace of change and, indeed, we got to respond with changes because it will send a very important signal to the financial services community that we are serious to develop Singapore as an important centre for wealth management and other services.

More importantly, as DPM has said, we are serious about our efforts in developing a modern trust jurisdiction. But messages do take time to filter through and we have just got to constantly keep at it, and indeed the Trustees (Amendment) Bill is just the second in a series of measures taken to develop Singapore as a jurisdiction for asset management. In the 1990s, we introduced tax exemption for foreign trust on approved basis, and in 2002 we improved this tax treatment by taking away the pre-approval requirement. This is a very important policy shift and it shows that a favourable tax treatment is a very important consideration for settlors of trust in deciding where to locate their trust management. But, here I would like to say there is a certain bias against trusts which are set up for Singapore citizens

and residents because the favourable tax exemption is not accorded to these trusts and I wonder whether this bias could be removed because it does not make sense that we should be taking charge of other people's assets when we are not doing so for our own.

Another important consideration for settlors of trust is that of the quality of legislation and DPM has touched on it. This has got to be constantly updated so that it is in sync with the best practices in terms of asset management, and indeed the Trustees (Amendment) Bill has removed all the constraints relating to investments, except that there is no longer a list of the sort of investments you ought to make and this really frees up the trustees in terms of creativity and professionalism. Now they could fully follow the best practices in terms of portfolio management.

I would like to commend this special new section, which is about the duty of care on the part of trustee, because now "professionalism" is mandated. I also like to commend all these changes made, the clarifications made in terms of custodians, agents and so on and also remunerations of trustees and reimbursements of expenses. The rule change in terms of accumulations is also welcomed. The trustees could now either fully accumulate or partially accumulate over the life of the asset of the trust. The perpetuity period is great in terms of modernising our language. Very few people understand what is life in existence plus 21 years and also the removal of reference to King George V and VI. The bottom-line is that it has removed a lot of uncertainties and I think it is very welcomed. But I think there is still work-in-progress in terms of the Trust Companies Act. Here again, the financial services industry is waiting for that to be reviewed too.

As I said earlier on, this industry is fast evolving and there remain quite a few issues which need to be addressed. Firstly, it is the area of the single purpose trust. This is a new innovation and could be very useful in terms of asset securitisation, in terms of company ownership. I think this would partially address the whole issue of trustee liability and also in terms of non-charitable trust relating to sports and also employees. But, having said that, there are limits and also risks associated with this purpose trust which are now not fully understood and really my comment here is for the Ministry to continue to monitor the utility of these concepts and have these quickly implemented when they are more fully understood.

Another area which is receiving the attention internationally is that this whole area of reservation of powers of settlors pertaining to investments has been addressed, but there are other powers of settlors, such as the validity of trusts when you have a structure which might be construed as a nominee arrangement, that need also to be addressed. My comment here is that the dialogue with trustees and practitioners should be continued so that they could be fully reviewed and implemented at a suitable time.

So I would like to close by saying that it is important that the dialogue continues and DPM has said that extensive consultation has been done because this is important to move the industry forward and openness of ideas and input from those who are responsible for the development of this industry would send a strong signal to the international fiduciary community that we want a respectable and reputable centre for wealth management.

I support the Bill.

I would like to thank the Member, Mrs Fang Ai Lian, for her strong support of the Bill. I agree with her that this is an area that is constantly changing and evolving and would like to assure her that we would continue to monitor and, wherever necessary, come to Parliament with further changes and modifications to our laws.

She touched on some specific issues. First was her point about exemption of income tax on foreign trusts. She felt there was some bias which works to the disadvantage of Singapore citizens. Of course, this is really outside the scope of the Bill that I took through just now, but I have taken note of it and I will discuss it with my colleague, the Minister for Finance, so that he can consider it. But, having said that, let me also say that from what I understand, the objective of the tax exemption scheme for foreign trusts was to encourage the trust companies and banks to offer international trust administration services from Singapore. My understanding is that the foreign trust probably would not have been administered from Singapore if not for the tax exemption. The scheme was, therefore, focused on the administration of foreign trusts rather than administration of trusts set up by Singapore citizens or resident individuals. But, nevertheless, let me assure her that the Government would constantly monitor developments in the trust industry and would review policies to ensure that Singapore retains our competitive edge as a financial centre. I believe that the Ministry of Finance would also be reviewing the tax treatment of trusts set up by Singapore citizens or resident individuals.

She also mentioned the Trust Companies Act. She is right in that this is work-in-progress. I understand that the MAS and the Ministry of Finance are currently creating a new regulatory framework for trust companies, including a new Trust Companies Act, to increase

legal clarity and guidance for trust companies in Singapore. MAS, which released the draft Trust Companies Bill for public consultation in July this year, would also take over the administration of trust companies from the Accounting and Corporate Regulatory Authority. Policy positions, I believe, are now being finalised and I understand that the updated legislation is scheduled for First Reading in Parliament sometime in January 2005.

She also touched on single purpose trusts and also non-charitable purpose trusts and the reservation powers of settlors. Let me say that in our review, we did consider the specific areas that she mentioned, but many issues that arise, especially from non-charitable purpose trusts and settlors' reserve powers, are matters which require careful study and we also need to see how other jurisdictions handle them and what has been their experience. We thought that this is a matter that we would not put in this Bill now and make a determination much later after we have had the opportunity to study the experiences of other countries. Having said that, let me point out that we have accepted recommendations to make it clear in this Bill that if a settlor reserves to himself powers of investment of asset management, then that in itself would not invalidate the trust. This is reflected in clause 21 under a new section 90(5).

Finally, let me assure again the MP that this Bill is not the end of the review process and we would continue to monitor and study the best international practices and developments as we take into account future changes to our law.

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. - [Prof. S Jayakumar].

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

Order for Second Reading read.

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

Sir, competition is a key tenet of Singapore's economic strategy. Market competition spurs firms to be more efficient, innovative, and responsive to consumer needs. Consumers would enjoy more choices, lower prices, and better products and services. The economy as a whole benefits from greater productivity gains and more efficient resource allocation. Therefore, wherever appropriate, Singapore has opened up sectors of the economy to market competition.

In February 2003, the Economic Review Committee (ERC) noted that whilst we have rules against anti-competitive behaviours in specific sectors like energy and telecommunications, there is no generic competition law that covers all sectors. It thus recommended that a generic competition law be enacted to create a level playing field for businesses, big and small, to compete on an equal footing. This will make for a more conducive business environment.

The Government accepted the ERC's recommendation, as competition law will help to reinforce our pro-enterprise and pro-competition policies, enhance the efficiency of our markets, and strengthen our economic competitiveness.

MTI subsequently studied the competition legislation of various jurisdictions, including the UK, Australia, Ireland, the United States and Canada. It also held two rounds of public

consultations on a draft Competition Bill in April and July this year, and conducted several briefings for businesses through the Singapore Business Federation.

The Bill before the House is largely modelled on the UK's Competition Act 1998. The Bill adopts international best practices, and yet takes into account our specific economic characteristics and requirements, in particular, the fact that we are a small open economy. It also incorporated relevant feedback and suggestions from the public consultation exercises. I would like to thank everyone who provided feedback during these exercises.

Sir, the objective of the Bill is to promote the efficient functioning of our markets and hence enhance the competitiveness of our economy. The Bill seeks to prohibit anti-competitive activities that unduly prevent, restrict or distort competition. We recognise that any regulatory intervention in the market may impose costs.

Therefore, we need to balance regulatory and business compliance costs against the benefits from effective competition. Instead of attempting to catch all forms of anti-competitive activities, our principal focus will be on those that have an appreciable adverse effect on competition in Singapore or that do not have any net economic benefit. In assessing whether an action is anti-competitive, we will also give due consideration to whether it promotes innovation, productivity or longer-term economic efficiency. This approach will ensure that we do not inadvertently constrain innovative and enterprising endeavours.

Establishment of a new statutory body and prohibited activities

Parts I and II of the Bill establish a new statutory body, the Competition

Commission of Singapore. This Commission will administer and enforce the competition law. Part III sets out the three main prohibited activities under the Bill.

First, anti-competitive agreements, decisions and practices. Clause 34 of the Bill prohibits agreements, decisions and practices which prevent, restrict or distort competition in Singapore. These include agreements between competing firms to fix prices, reduce the quantity of the goods and services sold, or to share markets. The provisions of any agreement or any decision that infringes this prohibition will be rendered void on or after the date the section 34 prohibition comes into force to the extent of the infringement.

Clause 36 empowers the Minister to make an order, following the recommendation of the Commission, to exempt certain categories of agreements from this prohibition. This is provided that they improve production or distribution, or promote technical or economic progress, without imposing undue restrictions or substantially eliminating competition.

Second, abuse of a dominant position. The Bill does not prohibit dominance or substantial market power per se - firms can continue to increase market power through offering cheaper or more innovative products. However, clause 47 prohibits firms from abusing market power in ways that are anti-competitive and which work against the long-term economic efficiency, eg, predatory behaviour towards competitors.

Third, mergers and acquisitions which substantially lessen competition. Sir, not all mergers and acquisitions (M&As) have anti-competitive effects. Being a small

open economy, highly-concentrated markets are sometimes inevitable in Singapore. Thus, only M&As which substantially lessen competition and have no offsetting efficiencies are prohibited under clause 54. Firms are not mandated to seek approval or to notify the Commission of any merger, but those that wish to seek the Commission's guidance or decision can do so on a voluntary basis under clauses 57 and 58.

For mergers involving public interest considerations, clause 58 provides that the Minister will decide whether such matters may be exempted from this prohibition. The Minister's decision is final.

Clause 61 provides that the Commission may publish guidelines on how it will interpret and give effect to the provisions of Part III of the Bill. The Commission will set out its analytical framework and implementation approach in its guidelines, which will enhance transparency and give businesses greater certainty. As a practice, the Commission will conduct public consultation before finalising its guidelines.

Let me move on to the scope of application. The Bill will apply to commercial and economic activities carried on by private sector entities in all sectors, regardless of whether the undertaking is owned by a foreign entity, a Singapore entity, the Government or a statutory body. However, as the intent of competition law is to regulate the conduct of market players, it will not apply to the Government, statutory bodies or any person acting on their behalf.

As a small open economy, we are vulnerable to anti-competitive activities from entities operating overseas. Consequently, clause 33 thus provides for the extra-territorial effect of this competition law.

Clauses 35, 48 and 55 exclude matters or mergers specified in the Third and Fourth Schedules from the prohibitions of the Bill.

Some of these are based on public interest considerations such as national security, defence and other strategic interests. The other exclusions are for sectors or activities which already have sectoral competition frameworks. These sectors are in transition from a previously monopolistic situation to a more competitive environment today. And in such circumstances, more active market regulation and intervention is needed. Moreover, there are considerable technical matters affecting competition in these areas. Hence, the sectoral regulators, with their industry knowledge and expertise, are in a better position to handle such issues. However, cross-sectoral competition issues will be dealt with by the Commission, in consultation with the sectoral regulators.

The sectoral exclusions listed in the Third and Fourth Schedules are not intended to be permanent. After the competition law has been in force for some time, we will review the need for such sectoral exclusions, taking into account market developments at that point in time.

Powers to investigate, adjudicate and sanction; and rights of private action

The Commission will have powers to investigate and adjudicate anti-competitive activities, as set out in clauses 62 to 68. Clause 69 empowers the Commission to impose sanctions, such as requiring the offender to modify or terminate the agreement or conduct, pay a financial penalty, and carry out structural remedies. Structural remedies will be calibrated based on the redress

needed to stop the anti-competitive activity in question.

Besides financial penalties, violators of the competition law are liable to be sued by parties who suffered loss or damage directly as a result of the infringement. Clause 86 provides for such rights of private action, after the Commission has made its determination and the appeal process exhausted. This will serve as an additional deterrent.

Appeal process

Part IV of the Bill covers the appeal process. A Competition Appeal Board will be established to hear appeals against the decisions of the Commission. The Board will be an independent body comprising members appointed by the Minister. Only parties which the Commission has made a decision against may appeal to the Board. They may make further appeals against the decisions of the Board to the High Court, and thereafter to the Court of Appeal, but only on points of law and the amount of the financial penalty.

Phased implementation approach

Sir, we will implement the competition law in phases. The phased approach will allow time for the Commission and for businesses to prepare for the implementation of the law. In the first phase which will commence on 1st January 2005, only the provisions establishing the Commission will come into force. There will then be a 12-month transition period before the provisions on anti-competitive agreements, decisions and practices; abuse of dominance; enforcement; appeals processes; and the other miscellaneous areas which will take effect on 1st January 2006. This would be the second phase. In the third phase, which is likely to be 12 months thereafter, the remaining provisions relating to mergers and acquisitions, which are more complex and technical, will come into

force. During the transitional period, the Commission will carry out more outreach programmes to raise the level of awareness and understanding of the law.

Sir, our economic strategy over the years has been founded on a strong adherence to free market principles and international best practices adapted to our local conditions. With the enactment of the Competition Bill, we will create an even more conducive environment for businesses, foster greater dynamic competition, and promote more efficient and innovative markets. This will benefit both enterprises and consumers, as well as ultimately strengthen Singapore's overall economic competitiveness.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, the Competition Bill is one of the key recommendations of the Economic Review Committee. This Bill gives teeth to the Government's announced policy of curbing any predatory practices of dominant industry players and encouraging more open competition, which forces companies to be innovative and responsive to market pressures and demands. As a result, consumers will benefit from lower prices, more variety and choices and better services,. The economy as a whole will gain. Sir, therefore, I wish to express my firm support for this Competition Bill. In fact, it is long in coming. Nevertheless, it is heartening that Singapore is finally going to have a competition law.

Being a new initiative, there are many aspects of this Bill which are not clear and may need some fine-tuning over time. I would like to take this opportunity to raise a few queries on this Bill.

The Competition Bill exempts various sectors that have their own regulatory

authorities and laws. This can create uneven standards on competition policy between this Competition Bill and the regulators of the exempted sectors. Moreover, these other regulators may be motivated and governed more by their sectoral interests and controls, and not focused on ensuring competition.

Let me cite an example. Recently, there was an announcement on the proposed merger of SPH and MediaCorp. I read that the governing media body has approved the merger. But is the approval accorded based on the financial benefits accruing to the two entities to be merged or based on the potential benefits to customers and the industry?

I notice that when there are two existing competing media providers, the consumers get more variety of TV channels, newspapers and more innovation in terms of service level and product variety. Once the media merger is implemented, we naturally expect to see the closing of some newspapers and TV channels. Would the merger therefore be good for competition and provide more services and variety to consumers? Perhaps not.

This media merger could well be the first test case for our Competition Commission. Should the Competition Commission intervene to object to the merger of SPH and MediaCorp?

There is a provision in clause 87 of the Bill which enables the Competition Commission to enter into cooperation agreement and mutual consultation with the exempted regulatory bodies. However, I feel that such cooperation or mutual consultation may not be sufficient. In some instances, the regulatory bodies of the exempted sector may decide to ignore the advice or the views of the Competition Commission. I would like to suggest that the Bill should enable the Competition Commission to have an

"over-arching authority" on matters concerning the promotion of competition and the avoidance of the creation of a dominant or monopolistic player. Hence, in the event that there are differing stances with regard to competition, the Competition Bill should prevail. I would like to ask the Minister whether this is possible or advisable.

My second comment on this Bill is with regard to what is deemed as "abuse of dominant position" of a major player. It is hard to police and define. A major player can decide to drop prices because it is more efficient, cost-effective and innovative. This tactic is ultimately beneficial to consumers. Therefore, why should the Competition Commission rule it as an abuse of dominant position? And why should the Authority disallow it? A weaker competitor can use this competition law to complain against the pricing tactics of a dominant player but, in actual fact, it could be that it is the weaker competitor who is not price-competitive. In such instances, how could the Competition Commission or the court decide and define what are the "losses" suffered by this minor player?

In fact, on the converse, it is the consumers who will gain arising from the lower prices that they have to pay.

Sir, I would like to seek clarification from the Minister on another point. Why is it that the proposed Bill proposed to form a new statutory board called the Competition Commission of Singapore? As the Minister has said earlier, the stated principle is to incur low regulatory cost, which means to be very cost-efficient. But the creation of a new statutory board means that there is a need for higher expenses in relation to new offices, a new CEO with his staffing needs and expenses relating to formation of a statutory board. Did the Ministry consider constituting the Competition Commission as a department

or a section within the Ministry of Trade and Industry? The Commission can be serviced by a secretariat. This approach could be equally effective without incurring higher costs.

Sir, finally, I wish to express my strong support for this Competition Bill. I am pleased to note that the Bill will guard against predatory behaviour towards competitors and the abuse of dominant position. I am sure this Bill would be helpful to our local start-ups and the small and medium enterprises (SMEs), as they seek to find a footing when competing in Singapore. I am, therefore, pleased that the Bill will be applicable to all companies operating in Singapore, including GLCs and MNCs. This Bill will ensure that there will be a certain degree of level playing field which promotes fair competition for all.

Sir, I support the Bill.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.25 pm.

Sitting accordingly suspended at 4.02 pm until 4.25 pm.

Sitting resumed at 4.25 pm

Debate resumed.

Mr Speaker, Sir, thank you for allowing me to join in this debate.

Sir, this Bill is worthy of support from this House. I say that because I think its objectives are laudable. It seeks to protect and promote the competitiveness of the Singapore economy as a whole. This will ensure efficient allocation of resources, productivity and ultimately

higher economic growth for Singapore. At the same time, through this process, it will also accrue benefits to the consumers and businesses in Singapore.

At the outset, Sir, I think we need to be clear. Competitiveness does not equate with competition. The key element here is in facilitating a competitive economy, the critical ingredient is what some have called "contestability". In other words, whether there is one, a few or many players in a given market, it is the potential and actual competition. In other words, the competition from the existing players in the market and also the potential for new entrants to come in and lead really ensure a competitive framework. And it is important that, in that regard, when we look at any market-related issues and competition, this be borne in mind. Ultimately, the objective is fair competition and it is not to protect individual players or competitors in the market.

Therefore, Sir, I support the Bill both in spirit and in principle. However, it is important to ensure that such a Bill, with all its good intentions, does not increase uncertainty and costs to businesses. The Minister has made this point. I wish to elaborate on it.

The fact of the matter is the establishment of a Competition Commission, which will administer the Competition Act if this Bill is passed, will create a new regulatory hurdle for all businesses. The Competition Commission will administer the Act, and it is important that its rulings and decisions are precise, unambiguous and timely, because all this has an impact on the way businesses are run and the costs and uncertainties they have to bear. Otherwise, the very objective of promoting Singapore as an attractive place to do business will be frustrated.

From that perspective, Sir, of needing to ensure that businesses have greater certainty, and this Bill does not impose undue costs, I would like to comment on a few aspects of this Bill. The first pertains to the scope of the Bill.

Clause 5 of the Third Schedule excludes sectors which are covered by any other written law, or code of practice related to competition and which gives another regulatory authority jurisdiction in the matter. There is a similar provision in the Fourth Schedule. The Schedule, in particular clause 5, does not explicitly state which sectors are, in fact, excluded. But I presume, and I think it can be reasonably inferred, that it applies to sectors such as telecommunications where competition is governed by, I think, the Telecommunications Code (the short form) which IDA administers; electricity and gas where you have the Electricity Act and Gas Act administered by EMA, if I am not mistaken; then the media industry where there is a code which MDA administers, and so on.

Sir, the question, in principle, is: should there be exclusions from the Competition Act for any sector? The competition law that we are promulgating here is a generic law. It has principles which are generic in application and these are principles that should apply to all sectors and be applied with consistency. That being the case, if we allow for exclusions of sectors which will have their own bodies administering, their own interpretation of what is fair competition, albeit in the context of

technical areas, the scope for inconsistency and differential interpretations is quite significant, and that is going to lead to potential conflicts. Allow me to illustrate just by giving a couple of examples where the Competition Bill and the Telecommunications Code differ. One is in the area of just penalties. The maximum financial penalty of up to 10% of the infringing party's annual turnover in

Singapore is what is provided for under the Competition Bill. So if you are found to have fallen afoul of the Act, then that is the maximum penalty. In the Telecommunications Code, the maximum financial penalty is S$1 million per contravention. So the scope for disparity is great. And, naturally, the applicant or the plaintiff might feel aggrieved if the party against whom he is making a claim gets off with a lighter penalty.

Similarly, the right or process of appeal differs as well. In the case of the Telecommunications Code, the appeals are to IDA and then to the Minister. In the case of the Competition Bill, the decision of the Commission can be appealed to the Competition Appeal Board. So there is again a different process. So the greyness of the scope is compounded by the fact that certain parts of the Bill appear to suggest that the Competition Bill will still apply to excluded sectors, and I will give you a couple of examples of that.

Clause 33(2) suggests that portions of the Bill will apply to industries and sectors which nevertheless have specific competition laws regulating them. And clause 61(3) suggests that the Competition Commission can prescribe guidelines applicable to specific regulated industries and sectors. So I think we need greater clarity on this matter. The first question is a question of principle. Should these sectors be excluded in the first place? My own view is that we should not, and the reason is what I have articulated earlier, which is these are common principles, they should hold true regardless of the sector, and they should be applied with consistency across all groups of industries. Given that we have gone for the second best solution, which is that we have existing bodies and we are trying to manage it, then the question is: if they are to be excluded, we should

state very clearly which sectors are being excluded and for how long, and what would be the threshold conditions which would compel the Ministry and, subsequently, perhaps Parliament to review these exclusions?

Also, given that the Ministry has opted for this intermediate approach where there will be some sectors that are excluded and the rest administered under the Competition Act, I think there must be certain very clear arrangements in place in the interim. These include, one, a harmonisation of the provisions in the sectoral codes vis-a-vis the Competition Act. This is to ensure that there is no gaming in the system and things are clearly established, and it will pave the way towards eventual integration. The second is coordination between the Competition Commission and the sectoral bodies. Why? This is to ensure that businesses do not have to go to two different parties to undertake two parallel processes which might have quite different outcomes. So it is important that, when an appeal is lodged, whether it is to the sectoral body or to the Competition Commission, they are brought together and processed as one appeal and given one outcome. And, thirdly, I would urge the Ministry to review this exclusion and perhaps bring it forward even at a faster pace. I think the Ministry of Trade and Industry has said 18 months or so, and it has given some indication.

Sir, I think we are not alone in this, lest I would be interpreted as being too critical. The UK also has got sectoral regulators having concurrent powers with the UK Competition Act, the Director-General of Fair Trading, and they work together and there are arrangements in place to make sure that they are closely coordinated. So it is not without precedent. I think the key element here is execution so that businesses have certainty.

Sir, another point I want to raise is the issue of lack of clarity in the meanings and definitions of key terms that are used in the context of this Bill. Sir, the Bill prohibits anti-competitive behaviour and agreements, abuse of dominant positions, M&As that substantially lessen competition, etc. But the key terms need elaboration and definition. For example, dominant position. How is dominant position calibrated? Is it by market share or market power? Are there thresholds? All of these obviously have problems and, clearly, there is an element of subjective outcome and decision-making. And this will reside primarily in the hands of the CEO or Director-General of the Competition Commission. But the players in the market must know when they are approaching the boundaries that are likely to test the limits of what the Competition Commission considers to be acceptable. What constitutes abuse? As Mr Leong Horn Kee mentioned earlier, what constitutes abuse of dominant position? If a key player in the market leads by price reductions, is that abuse? Or is that beneficial practice which will bring benefits to all consumers? And also, there is a question of substantially lessening competition. Again, it begs the question: what is the test of reducing competition?

Sir, if I could give an example. If there is an exclusive business arrangement between a Singapore company and a product service provider from overseas covering Singapore's territory, is that an activity that will be prohibited under the Bill? And I think the test is, as the Minister alluded to, this concept of appreciable adverse effect on competition of the Singapore market. And, again, I have to say that the Bill itself does not use the term

"appreciable adverse effect" in any part of it. I believe there is a passing reference to it in the Explanatory Statement. But the crux of the matter is, I think, most of us are none the wiser as to what actually would constitute "appreciable adverse effect". The Bill is general. It leaves much to the discretion of the Competition Commission, and I presume that it is intended to be the case. But the converse impact is that businesses are in the dark. The UK Competition Act also does not say much about these terms, to be fair. But in mitigation, first, soon after the Act was passed in 1998, I believe, the UK Office of Fair Trading developed rules, statutory guidance and advice to businesses. So they were better informed as to how this new Act would affect their business decisions. Equally, the UK also could resort to case law from the European Commission and that serves as another point of reference.

In our case, we do not have this reference to any case law. Because the Ministry has said that the Commission will issue guidelines on this matter, and I hope this can be done. And in doing so, may I make three specific requests. First, I would appreciate it if the Commission works on this fast, and not allow it to take 12 months or 18 months, but the sooner the better. Second, the process of formulating such guidelines should meaningfully include the business sector, because definitions of what constitute competition, anti-competitive behaviour, etc, are fundamental to the way many of these businesses are going to be run. And, thirdly, guidelines ultimately are non-binding. In other words, today, if a guideline is enacted, the Commission may choose to abide by it, but it may review it from time to time and that, indeed, is I think the intent. However, certain core principles that will underpin these guidelines should be embedded in the Bill. If we feel that today, we do not have enough experience in case laws to do so, I would urge the Ministry to revisit this over the space of the next two to three years to make sure that we do come back and amend this Act to embed certain key principles so that these are not open to interpretation.

Another aspect, Sir, is the retrospective effect that this Bill has on businesses. Clause 34(5) says that prohibition of these activities would apply to agreements entered into before, on or after the appointed day. "Appointed day" means in relation to a particular provision, the date of commencement of that particular provision. So this seems unfair or inequitable, because what it means is that the Bill would apply to agreements entered into in good faith even before this Bill was contemplated by the Government. So the question is: why are we having such an all-inclusive retrospective provision in this Bill? And this was not just a conceptual point as it means, first, businesses would incur substantial costs, because the moment the Act comes into force or certain provisions come into force, businesses would have to review all their agreements to see if they are in compliance and, if not, how they need to be readjusted. Similarly, it is going to create uncertainty for the businesses in case they are challenged or wondering whether they are going to be challenged. So the question I have is: why not restrict applicability to agreements that are signed after this Bill has been passed, or when this Bill was first tabled for public consultation which, I believe, was in April this year? At least, the market had first wind of what is happening and any action thereafter could be deemed to have been done with this knowledge.

The key point I want to make here is that we must restrict it in some manner and not let this retrospective application be extended without any end point. And I think if the Ministry is concerned that there may be some historical agreements that are blatantly unfair or anti-competitive, then those egregious cases could still be brought up on appeal or when a complaint is raised, the Competition Commission and the Ministry can decide whether it is worthy of

attention. But, in principle, it should not be a blanket application.

Finally, Sir, one specific comment is on the availability of safeguards to prevent frivolous or vexatious claims. Sir, it is quite well-known that, in some instances in business, they use anti-trust or such competition Acts and the processes and appeal methods available to them through these Acts as a business tactic to appeal so as to stall the business agreements that they feel would be against their best interests or to possibly even frustrate and stump it altogether. The question is: should there not be provisions in this Bill to protect against frivolous or vexatious claims? The provisions could be in the form of a compensation to be paid to the party against whom a complaint is lodged, if it turns out that the complaint was frivolous and vexatious. I know there is a policy concern that we do not want to deter bona fide complaints. But perhaps the way to deal with this is to ensure that such costs are only payable if it is assessed by the Commission that the complaint has, in fact, been frivolous or vexatious.

Sir, I hope the Minister would consider these points because this is an important Bill. It is going to change the complexion of the way we do business in Singapore. And I think it will certainly set the standard, in terms of what we are looking to achieve, but at the same time, we must make sure that, at the micro level, businesses are not disadvantaged and the outcomes run contrary to our very intent in passing this Bill.

Sir, as I listen to the speakers, many of them spoke with certain background of the business world. But my speech is purely from the reading of the Bill itself. Sir, I support the Bill in principle, but I cannot support the

Bill as it stands because of the wide powers given to the Minister for

allowing him not to accept relevant provisions in the Bill. The relevant provisions in the Bill are contained in clause 34 which disallows agreements preventing, restricting and distorting competition; clause 47 which prohibits any practice of abuse of a dominant position in any market in Singapore; and clause 54 which prevents mergers which may result in the lessening of competition.

I cannot agree with the provisions in the Third Schedule of the Bill. They are far too wide and too pervasive. The Third Schedule, to my mind, is wide enough to annul the intent and purpose of this Bill itself. Let us look at paragraph 1 of the Third Schedule:

"Neither the section 34 prohibition nor the section 47 prohibition shall apply to any undertaking entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly in so far as the prohibition would obstruct the performance, in law or in fact, of the particular tasks assigned to that undertaking."

This clause is so wide-ranging that it can cover the activities of any Government entity, Government-linked company, or any company which the Government has an interest in, or activities of a statutory body or Government-owned company.

Paragraph 2 of the Third Schedule is equally wide-ranging in taking away the effects of sections 34 and 47 prohibitions as long as an agreement complies with a legal requirement. And, as we all know, really, all Government-owned entities are the creatures of statute. Therefore, they are not caught by this competition law.

Sir, the economic development of Singapore is a recent history. We all know that Singapore was first built up as a socialist state. The early political philosophy of the PAP was democratic socialism. Therefore, the infant capitalist

system was not encouraged, but the public sector, by policy, was cultivated and built up. We see the Government controlled by one dominant political party and had a free hand in accumulating massive capital. The Government in Singapore, the richest sector in the economy, was soon the biggest landowner in Singapore. The Singapore Government now finds itself in an awkward position in a wholly-changed world from the 1960s and 1970s. Now we are in an era of fierce competition from the other so-called emergent nations, in particular, the People's Republic of China and the other neighbouring states. Singapore's strategy or way out of this changed situation is to enter into Free Trade Agreements with other countries, some of which are mature capitalist countries where the early infant vibrant competition in their markets has turned some of their companies into monopolies, which are anathema to the capitalist system.

We have read of Bill Gates of Microsoft having to pay millions of dollars in fines when its company abused its dominant position in the software business. So competition laws are necessary in America and other mature capitalist countries to break up the monopolies that are being formed there. We in Singapore started by not encouraging private enterprise but concentrated on growing the public sector. The public sector now dominates the whole of Singapore's economy. This is Singapore's dilemma. Now, we need to enact this competition law to unravel that dilemma and meet with other international obligations.

One important question comes to mind. I would like to ask the Minister whether exclusions contained in the Third Schedule are a permanent feature or whether there is a time-frame to remove them, including other provisions in the Bill

giving the Minister power to avoid the prohibitions and against monopolies as well as the above dominant positions and mergers as contained in clauses 34, 47 and 59 of the Bill.

Sir, as regards the Bill itself, I would only like to have a clarification on one point from the Minister. I notice that the District Court shall have the jurisdiction to try any offence under the Act and shall have power to impose full penalties or punishment in respect of the offence. As regards punishment, clause 83 imposes a fine not exceeding $10,000 or imprisonment for a term not exceeding 12 months. I have no quarrel with this punishment or penalty because they are within the jurisdiction of a District Court. But we see that under clause 69(4) of the Bill, the Commission can impose a financial penalty up to 10% of the turnover of the defaulting business. Nowadays, some businesses in Singapore have a yearly turnover of hundreds of millions of dollars, and a financial penalty of 10% of its turnover can easily exceed the quantum allowed under the jurisdiction of the District Court which, I believe, is to be only about $250,000. I stand corrected. If that is so, then the District Court has no jurisdiction to impose such a large financial penalty under the said clause 69(4). The Minister might like to comment on this provision of the Bill.

Mr Speaker, Sir, I would like to express my appreciation to the Ministry of Trade and Industry for finally presenting this Competition Bill for passage through Parliament. I have a personal interest in this Bill, because it was first proposed by the sub-committee which I chaired, ie, the Government in Business Sub-Committee, which was part of Minister Raymond Lim's Committee on Entrepreneurship and Internationalisation.

When my committee studied the role of Government and its companies in encouraging or stifling entrepreneurship, it was obvious that what Singapore lacked was a generic competition law which would, in an indirect way, encourage the emergence of entrepreneurial companies in Singapore. When the committee looked at this, our vision of the competition law envisioned these few things.

We needed to create a level-playing field so that no one company has an undue advantage, particularly the Government-owned companies;

Anti-competitive business practices needed to be eliminated or banned, and these include practices like collusion, bid-rigging, price fixing, which involved coordinated action by direct competitors;

The abuse of dominance needs to be eliminated. Abuse of dominance includes action by any single dominant player. Monopolies will not be banned, but abuse of market dominance should be. For example, the use of predatory pricing to exclude new entrants; and

Companies intending to do mergers and acquisitions should pre-notify the competition authorities for transactions above a certain market value, eg, one-quarter for each company or one-third for a merged entity, with certain turnover thresholds. The competition authorities may approve the M&A deal with certain conditions attached.

Some other issues that we wanted the competition law to address include:

There must be a serious attempt to prohibit exclusive deals between the Government or its agencies and any of the GLCs;

We did realise that certain exemptions might have to be included,

especially in sensitive areas of the economy, but the number of exclusions needed to be limited;

All companies will have equal access to the national infrastructures, and these should not be given on a silver platter to any Government-linked companies;

Whatever law is enacted should not add to the costs and, hence, compliance costs should be minimised for these companies; and

An independent competition authority should be set up to formulate the policies and rules and to rule on cases violating the law.

So, how has the Ministry fared against the expectations of the committee on this competition law? I would like to say that they have scored seven out of 10, and I am very happy with the outcome. Seven out of 10, coming from me, is actually a big compliment!

Let me say that in targetting large companies, especially GLCs, the intent was not to dismantle the dominant positions that these companies have, but to restrict them from using their dominant position to stifle competition. So, we were mindful that we should not destroy the value of big and well-run companies, but to prevent them from allowing other companies from also competing successfully with them. As an example, if a large company uses predatory pricing to eliminate smaller players, this should not be allowed. Similarly, should a large company set rules of business together with the Government by giving feedback where only they will benefit and smaller companies find it difficult to comply, this is also an uncompetitive behaviour.

Sir, I have a few specific points on this Bill to discuss.

First, the exclusions, and many Members have raised these. By virtue of the Third Schedule and the many clauses in the Bill which exempt certain sectors from inclusion in the competition law, we have in fact excluded many of the sectors of our economy which were originally intended to be governed by a competition law. It is a pity that so many sectors have been protected under the law. I see no reason to, for example, protect the telecommunication, postal, media and transport industries and specified parts of the banking industry. In fact, we could also have been more aggressive in including even certain parts of the energy industry in this competition law. An argument made by the Ministry is that there are already laws regulating these industries. I feel that the competition law should have been a senior law, ahead of all other sectoral regulations.

Presently, the Bill enables many sectors that already have these regulatory commissions to oversee competition within their relevant sectors. In effect, this law becomes a secondary law for these sectors, only to be enacted if the industry players cross over into a non-regulated sector. This has the potential to cause a bit of confusion, in my opinion. With this, each commission will have to have its own definition of dominant position, predatory pricing, undertakings and what constitutes anti-competitive behaviour.

By making the competition law a higher authority in Singapore, it will help unify and streamline definitions and guidelines. The different regulatory commissions will fall under this law, but provisions can be accorded to provide the relevant authorities to exercise flexibility to regulate and allow sectors to be more competitive. An added benefit of this would be to have an avenue for companies within their respective sectors to have a higher avenue of appeal in cases of dispute with their regulatory authorities.

A case in point is our FTA with the USA, which provides for judicial review of regulatory decisions. Article 9.11(3) of the USSFTA provides for the right of judicial review of a regulatory decision. It clearly sets forth that any aggrieved party in the telecommunications industry in particular must have the opportunity to have this review of a decision by a regulatory body. As it stands, the Code of Practice for Competition in the Provision of Telecommunications Services by the IDA does not allow this to happen. So, therefore, we do not fully meet the obligations of this bilateral agreement.

I also note that in its submissions to the Ministry of Trade and Industry, Temasek Holdings encourages these sectors to be also included without any excessive protection, stating that "Companies should be allowed to grow and thrive on sound commercial principles, unfettered by bureaucratic impositions or non-commercial Government directions." If Temasek, which has a vested interest in and owns most of the companies in the excluded sectors, feels that these companies should compete unfettered by any protection, there is, in my opinion, no need for the Government to provide these companies any further protection.

Sir, the second issue is one of establishment of the Competition Commission of Singapore. It is important that the competition law must operate in a fair and transparent manner. Concern should arise from parties involved in commercial disputes about the objectivity and independence of this Commission.

MTI has a number of statutory boards, some of whose senior executives sit on the Boards of Directors of corporate entities, particularly the Government-linked companies. Additionally, some of these statutory boards also have

ownership and interest in GLCs that would be subject to the Competition Act. I hope that the Minister would help keep the integrity of the Commission clean by not having too many civil servants, whether directly or indirectly, who have connections with the GLCs being regulated under this law to sit in this Commission. Otherwise, it will defeat the purpose and it will make implementation of the law ineffective and people will lose confidence. Strict independence and clear goals of encouraging competition without vested interests to protect certain Government-owned companies should be the order of the day with this law and with the Commission.

Sir, the third issue is on the scope of the Bill. In general, an effective competition regulatory regime will aim for a consistent and broad application. The application of competition law to all business entities, regardless of ownership, industry or function, is important in establishing a culture of competition within any economy. But it is noted that the Bill has wide extra-territorial applications. For example, clause 47(3) defines a dominant position to include a dominant position within Singapore and also elsewhere. However, it is not clear why the Bill should be concerned about a firm's dominant position in some market outside Singapore if it does not also have a dominant position within Singapore. In other words, if a firm does not have a market power in Singapore or in a

geographic market that includes Singapore, it is not clear how it could use that market power to harm its competition in the Singapore market. I would like to recommend that this section be revised to make it clear that the Bill covers foreign firms with a dominant position in Singapore but not firms with a dominant position in overseas market, but not in the Singapore market.

I also note that in clause 33 of the Bill, it provides that as long as an "agreement,

abuse of dominant position ... or merger infringes or has infringed [or likely to infringe] any prohibitions in this Part [III]", it does not matter whether the agreement has been entered into outside Singapore or the abuse of dominant position is outside Singapore. This means that agreements made entirely between foreign undertakings and decisions by associations of foreign undertakings or concerted parties will be caught by the Act as long as it can be shown that its effect is to prevent, restrict or distort competition within our shores.

Sir, the UK Competition Act, in contrast, provides that the Chapter I prohibition against agreements applies only if the agreement, decision or practice is implemented in the United Kingdom.

Such broad extra-territorial application will put unnecessary strain, in my opinion, on the Competition Commission, as it would have to help to assess the impact of this abuse or violation in the various economies that may not necessarily be in Singapore. I think this is not a necessary thing.

Sir, in conclusion, let me once again say that the real intent of a competition law should be to create a level playing field, to eliminate, if possible, or, at least, to drastically reduce practices which stifle competition in Singapore. While historically the Government favoured certain companies, making them dominant players in our economy, this historical reality should not result in these big Government-owned companies or even private-owned companies abusing their position of dominance. The Government has already done enough for them in the past and now they should no longer be in a position to unfairly benefit from the old favours that they may have got.

What we would like to see accomplished is a healthy environment where

there is a true form of competition, and where a large number of our enterprises and industries are highly competitive. If it is an important part of our overall plan to make SMEs a dominant force of our economic growth and, indeed, to turn our economy from being one where we attract only large companies to one of an entrepreneurial one, a decision needs to be made to soften the perception. We should not be half-hearted about this. As our large companies will only benefit and not lose from this new landscape of less protection and more competition as they try to compete globally, they would also welcome this new law. And with this prevailing chasm on the restructuring efforts, it must be noted that, depending on the approach that we take on this competition law, we have the potential of this being a keystone in Singapore's economic restructuring initiative.

Sir, I am very happy to support the Bill. It is something that we have been waiting for a very long time.

Resolved,

That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Debate resumed.

(In Mandarin): Mr Speaker, Sir, with Singapore's economy developing and maturing, with our market moving towards the trend of internationalisation, and in order that we would be in line with international best practices, the

enactment of a fair competition law is absolutely necessary so as to protect the interests of our consumers. In fact, some ASEAN countries such as Indonesia and Thailand have already enacted their fair competition laws.

This Bill will help our Government to effectively and fairly regulate the supply and demand of goods and services in the market, and make sure that goods and services are provided at reasonable prices. This will help the new enterprises, inspire innovation and creativity, so that our market will be more flexible and competitive. With this new Bill to regulate and control the market, more foreign companies will be attracted to invest here, thereby creating more job opportunities to resolve our unemployment problem and, in the process, bring about economic prosperity.

I believe that this new Bill will receive strong support from the consumers too. They are looking forward to various benefits that will be brought about by these new measures, such as cheaper goods and better service. This would not only benefit our local citizens but will also attract more tourists and, thereby, promoting growth in the tourism industry. Such healthy competition will bring a lot of benefits to our people, for example, the intense competition among the oil companies is a good example. Recently, despite the escalation of oil prices, the petrol companies in Singapore are giving their customers 5-10% discounts. This will help to regulate the petrol prices and, at the same time, benefit the motorists. This is an example of benefits brought about by healthy competition.

Protection of the interests of ordinary citizens is of paramount importance, particularly on basic daily necessities, such as drinking water, energy supply, housing, transportation and communica-

tions. Ordinary citizens are often exploited by unscrupulous merchants when they are not adequately informed to strike up a good bargain for themselves. For example, during the recent spell of Avian flu, eggs, which would normally cost only 15 cents each were being sold at 60 cents each, when there was a shortage of supply. The ordinary citizens are already suffering when they have no eggs to eat. Yet, the merchants are raising the price. This is like what we call, "rubbing salt into their wound", and this is a consequence of unfair competition.

The enactment of this law is an excellent policy of the Government. MTI has conducted seminars to invite suggestions by members of the public and the professionals so as to finetune and improve on the Bill. I think this kind of consultative approach is excellent.

Mr Speaker, I would like to make two suggestions on this Bill:

Firstly, I suggest that the Government enlarge the scope of regulation and control under this Bill and not to exempt certain industry sectors from the control of this Bill. As it stands, industry sectors such as telecommunications, media and energy, do not come under the control of the proposed Competition Commission of Singapore. This will result in "one policy, two systems", creating confusion to the people. These industry sectors, such as energy and communications, are daily necessities to our people. If we do not have good control over the price and service, it would result in a lot of confusion and friction that would, in turn, give rise to opportunities for the industry sectors to engage in unfair competition. I would suggest that telecommunications, media and energy companies should also come under the control of the Competition Commission.

Secondly, members of the Competition Commission should also avoid sitting in

the Board of Directors of commercial companies to ensure independence and unbiased decisions when making rulings. Although the Bill does provide for members to declare their interest as company directors and to refrain from participating in voting on any resolution which may have a conflict of interest, I feel that this is not enough. In order to avoid vicious suspicion and misunderstanding, it should be more advisable for members of the Commission to avoid taking up directorship in commercial companies.

I support the Bill.

Mr Speaker, Sir, I think the Competition Act is long overdue. Other developed countries had this law much earlier than us. It is therefore important that we learn from others and do it right as soon as possible in order to maximise its benefits to our economy and society.

To me, the purpose of the competition law must not just be to prevent anti-competitive behaviour as it is the main focus of this Bill. This approach is too narrow. The purpose must be to promote competition in all areas of the economy, to lower the barrier of entry for new businesses and to ensure fair play. This will then lead to benefits at three levels - the consumers, the companies and the nation as a whole.

To the consumers, it will mean more choices and better quality of goods and services at lower prices. To the companies, free and fair competition will result in better efficiency and innovation to the country. There will be all round productive gain that will increase our national competitiveness and provide better employment opportunities for our citizens.

To achieve all these, I do not think the approach taken by the Competition Bill is good enough, which is to prohibit three

activities, namely, anti-competitive agreements, abuse of dominant position and mergers and acquisitions that substantially lessen competition. Further, the Bill does not extend its powers to certain industry sectors as well as Government policies and practices that stand in the way of effective competition.

Sir, I strongly feel that such a narrow approach to this law will not serve us well. Australia started this law leaving all government activities aside. Soon, they discovered that there was a need for the Competition Commission to work with all government agencies, be it state or federal, to review all government policies and practices and lay down the principles of effective competition for all government bodies to adhere to.

What our competition law should do is to lay the overall framework for competition in Singapore, encompassing all industries and all players. The proposed Competition Commission should oversee all matters concerning competition, except those relating to national security. Any complaint regarding ineffective competition should be fully investigated by the Commission. If a complaint is related to a regulated industry sector or to a certain Government policy or practice, the Commission should work with the relevant Government body to resolve the issue.

Sir, I suggest this because each statutory board or Government department has its own objectives and functions, be it safety, infrastructural development or fiscal. They are not single-minded as far as promoting competition is concerned. Take, for instance, LTA. Its main objective is to ensure efficient transportation of people and goods. For years, Singaporeans have been paying higher prices for purchase of cars, not just because of high taxes, but also because of high profit margins earned by the authorised agents due to ineffective

competition. As promoting such competition was not really the priority of LTA, it has taken LTA many years to allow parallel imports to compete. Just when it was thought that parallel importers would give authorised agents a run for their money, manufacturers and their agents found a way to exploit a Government rule to beat the competition. Since the signing of the Free Trade Agreement with the US, our Customs adopted the Customs Valuation Code (CVC) to assess the Open Market Value (OMV) of a car. Manufacturers are now using transfer pricing to give hefty discounts of their factory list price to their agents. These discounted prices lower the OMV of cars imported by authorised agents. On the other hand, in determining the OMV for parallel import cars, Customs add an uplift to the purchase price paid by parallel importers, notwithstanding that the purchase price is already higher than the OMV for cars from the authorised agents.

As a result, cars purchased from the authorised agents pay a much lower Additional Registration Fee (ARF). The ARF is 130% of the OMV. So, needless to say, what we are seeing today is there is hardly any competition from parallel importers. Has anyone ever asked why there should be two substantially different OMVs and, therefore, ARFs, for essentially identical cars?

Another very old policy of LTA is the surcharge of $10,000 imposed on imported used cars not more than three years old. With today's technology, such cars would not have problem meeting LTA's technical and environmental specifications, but the surcharge of $10,000 has made import of such cars non-viable. Without the surcharge, I am sure there would be keen competition in car sales that would benefit car owners. Sir, in my view, the Competition

Commission should have the preview upon industry or consumer's feedback to look into such Government policies or practices, whether they are from Customs or LTA.

In conclusion, Sir, the competition law must not be one of just preventing abuses. It must also serve to promote competition as its ultimate objective and the best way to promote competition is to lower the barriers of entry for competition. These barriers, be they from Government policies or anti-competitive behaviour of private companies, inhibit new entrants into the industry, depriving the consumers of choice, as well as a generally lowering of price through competition. The Commission should be empowered to investigate and act against practices which put up artificially high barriers of entry into the industry such as unfair pricing of certain core services or complex procedures to discourage new entrants. Companies which are strongly vertically integrated should be closely watched for these misdeeds. On top of that, there must be a pro-active and coordinated review of all Government policies and practices that affect competition. Only then could we have a meaningful and useful law that would maximise the benefits of competition for Singapore and Singaporeans.

Thank you, Mr Speaker, Sir, for allowing me to participate in this debate.

Sir, it is wonderful that Singapore is finally introducing a Bill to make provision about competition and the abuse of a dominant position with the intended effect of creating a level playing field for all participants. I have been looking forward to the introduction of this Bill since the day it was mentioned many years back because I believe that competition would bring about cheaper prices and better services by the providers. However, as I

flipped through the pages of this new Competition Bill, my fears have been confirmed. I am dismayed to learn that this Bill does not cover our political sphere. This Bill does not have any written provisions to check the monopolistic powers, anti-competitive behaviour and the abuse of a dominant position by a political party, in particular, the governing party of Singapore, against its competitors in the political market.

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It is a well-known and recognised fact that the PAP, as the governing monopoly in Singapore, uses every resource within its dominant power to make anti-competitive practices, like the redrawing of the electoral boundaries and regrouping of weak constituencies into new and bigger GRCs, the threats to upgrading and the giving and cashing out of the New Singapore Shares one day before polling; and, more importantly, the announcement of the heavily amended electoral boundaries one day before the dissolution of Parliament.

rose ---

Order.

Mr Deputy Speaker, Sir, my speech is relevant because I am saying that the Competition Bill should include all sectors, including Government services, agencies and Government service providers - parties that are seeking the mandate of the market for public support.

Sir, these are highly anti-competitive practices by a dominant player in the market for public support. If this anti-competitive behaviour is not checked and corrected in time, I fear the greater erosion of our democratic principles of

equity and fairness, for which this society is built. The results of such unchecked abuse of monopolistic powers will be greater public apathy, higher disinterest in the affairs of our society and a stronger climate of fear among the populace, like what was reported in the media last week at the feedback conference attended by our youths.

Sir, I believe that the establishment of an independent Competition Commission, with the powers to receive, review and check reports of any abuse of the dominant position of a Government political party is the first step in the right direction and would go a long way to uphold our core principal values of democracy, equity and fair play. This would definitely benefit the population, which is rightly a consumer in sore need of public protection, from the abuse of a dominant player.

Sir, I believe that expanding the role of the Competition Act to cover the political arena would help to create a more level-playing field for all interested stakeholders in the future of our country. I support this Competition Bill for now as I take it as the first step towards greater accountability and checks on all dominant players, both in the economic, social and political market.

If this Government refuses to allow the growth of genuine competition in its own political turf, then there is no moral basis for this Government to introduce this Competition Bill to affect other business providers. This Bill needs to be expanded to cover political and all other social service providers. I hope and expect the next amendment to this Act sometime later to seriously take in the said views and right the wrongs expressed herewith.

Sir, I did not know that the Non-Constituency Member has taken politics to be a

business. I thought the essence of politics is to allow people the right of choice. In the nature of democracy in any election, people do have a choice. And, if people so decide that this party continues to dominate the political scene, it is a demonstration of the free will and choice of the people. And that is the reason why we are in this House, term after term, election after election. Why do you question the people's choice? Perhaps it is with the same obstinacy of failing to understand that he raises these arguments.

Sir, the contest of ideas between those who advocate free markets and those who argue for command economies was symbolically settled at the close of the last century with the collapse of the Berlin Wall - once the symbol and the bastion of communism - and with it, its attendant association with central planning and allocation of resources. Without a doubt, the free market has prevailed and, save for one country, in this world today, no country can openly deny that they have no aspirations in promoting an open and openly competitive economy; even if they still outwardly exist in form as communist regimes.

Indeed, the free market as an ideology has prevailed. It, however, does not mean that there are no excesses associated with it. It would be folly to assume that competitive forces, the drivers of efficiency and productivity do not require regulatory oversight to prevent abuse and unfair practices. Predatory pricing, cartelling and outright muscling out of smaller competitors exemplify the sort of practices that are borne out of the excesses of the market place and for which regulations setting the rules must be introduced. For this reason, I support the timely introduction of the Competition Bill.

Although the new legislation is a welcome instrument, there are, however, a number of concerns that I wish to raise before this House.

First, I note that the Competition Commission of Singapore would be constituted as a statutory board, just like any other statutory body in Singapore. The Commission would be constituted in part by the Market Analysis Division, which is presently housed in the Ministry of Trade and Industry. It is an extension of a department of Government. This should not typically be a problem, except that there are inherent issues of perceived conflict of interest that should be dealt with.

In the eyes of the public, the Government in forming the Commission plays the part of a gamekeeper. Yet, at the same time, the Government is also in business. It may on occasions be seen to be a poacher. This is evident in the extensive and deep engagements that our GLCs have within the Singapore economy. I am fairly certain that in the nature of things, the Commission would be asked to determine questions involving some agreements or business practices of our GLCs. When it happens, the Commission would no doubt be hard put to ensure that justice is not only done, but must be seen to be done.

The Government may at times require a consolidation of strategic services and manufacturing operations to better position Singapore competitively in the world market. If such consolidations are challenged, the Commission would find itself in a rather invidious position of having to decide between the interest of the other businesses and the interest, even if indirect, of the Government.

Indeed, the framework of the present legislation on competition does not do much to allay any misgiving that one may have from an initial review of the Bill.

Clauses 35 and 48 provide that the prohibitions in relation to anti-competitive agreements or abuse of dominant position do not apply to matters specified in the Third Schedule. Generally, the Schedule allows the Minister the ability to exclude any agreement from the application of clause 34 which relates to anti-competitive agreements and also to exclude, in what I find is rather bizarre, some corporate behaviour from the application of clause 47 which relates to the abuse of dominant position. If Members were to refer to clause 47, examples of such abuse include predatory behaviour towards competitors; limiting production, markets or technical development to the prejudice of consumers; and applying dissimilar conditions to equivalent transactions with the other trading partners, thereby placing them at a competitive disadvantage.

I find it strange that this legislation on creating a more competitive environment should now deem it fit for the Minister to sanction what the rule has described as unacceptable and unfair behaviour.

The Bill, if it is to inspire greater confidence in the competitive environment, Sir, could be strengthened further by removing or greatly minimising the ability of the Government to interfere in its decision making process. Rather than reconstituting a department of the Ministry to undertake the work, it could have perhaps set up a Tribunal of Experts as opposed to a commission to undertake the review process. A tribunal would presumably have a greater leeway in settling the procedures by which it is to decide. More importantly, Sir, it could and should be parked in the judicial arm of Government, thus avoiding any suspicion of conflict of interest which the present approach seems to be saddled with.

I do accept that a legislation of this nature should allow the Government some discretion to intervene in the name of

national interest. However, while the necessity of such intervention is not denied, it does not mean that for the benefit of certainty in our laws, the Minister's discretion on such matters should not be fettered. Presently, there is some restraint in the Third Schedule in limiting such carve-outs to exceptional and compelling reasons. However, one would argue that such references are too vague and broad and do not give the full assurance that it may not be abused. It may be better to stick to more elaborate descriptions as to the grounds on which the Minister may exercise his power to carve out exceptions to clauses 34 and 47.

Secondly, as a corollary of the point above, I note that the Bill allows a person to appeal to the High Court or the Court of Appeal on questions of law in respect of a decision of the Commission. The issue of questions of law will lie in the interpretation of provisions of the Bill. This would include phrases like "prevention, restriction or distortion of competition", or "abuse of a dominant position in any market". Indeed, as is the experience in the other countries, much guidance on competition law will have to be given by case law.

This raises a fundamental question as to whether the courts are indeed best qualified to undertake such determinations. Judges are essentially lawyers who are trained in the analysis and application of the law. They are neither economists nor financial experts who would readily comprehend the intricacies of the market place operations. Questions on the meaning of a word within the Bill on competition would require a thorough analysis on not only the plain import of the word, but also the impact that the decision would have against the wider economy and society. Are judges, therefore, technically trained to undertake such technical analysis and review?

Of course, it may be said that to overcome this limitation, judges may have the services of an amicus curiae or Friend of the Court in coming to a decision. This does not, however, leave one with the ideal position of having the best qualified person for the job.

To take an extreme example, this would be akin to having a lawyer undertake a surgical operation while being guided by a surgeon at the same time.

Thirdly, the Competition Bill is rather unusual in having extra-territorial reach. Clause 33 provides inter alia that the Act shall apply even if any of the proscribed activity takes place outside of Singapore. Sir, I can understand that for the policy to be effective, the law must extend to activities beyond our borders. However, as the Minister would appreciate, such intent raises more issues than answers. For instance, how does one begin to take enforcement actions against parties who may not have a business presence in Singapore?

Typically, in the nature of commerce, one does not have to have a business domiciled in Singapore to do business. Coca-Cola and Nike, which are international brand names, do not need to be present to set up shop here as they deal through their distributors. It is conceivable that the Coca-Colas and the Nikes of the world may engage in restrictive trade practices or to be seen abusing their dominant market position to the detriment of consumers here in Singapore. Does it mean therefore that the Government will ban the promotion and sale of Coca-Cola and Nike products in response?

Furthermore, the extra-territorial reach of the Bill does not effectively deal with trade wars at the international level. We all know that in a globalised economy, there is an increasing tension within respective countries from affected interest

groups who clamour for more protection. Outsourcing of services is one clear example of how trade issues on a global scale are increasingly coming to a head in some countries. Can a pact by a group of IT companies in response to labour union pressures to stop outsourcing IT services to Singapore be seen as a matter which comes within the ambit of our competition law? Would the restriction of sale of certain goods overseas to meet local demand by a company in one country be seen as a breach of our laws if as a result of which such goods in Singapore cost much more? No doubt, these are issues which the Commission will have to decide, and even if the Commission were to decide, would have to determine how best to enforce.

Fourthly, I note that the Bill also contemplates retrospective application. While it is fair that the Bill should apply retrospectively to any of the proscribed activities, it may perhaps be seen to be unduly harsh or unfair to the parties concerned, as such arrangements were perfectly legal and legitimate at the time when they were concluded, and this was a concern raised earlier by my colleague in this House. Retrospective application of laws should be avoided where possible as it gives rise to much uncertainty within the legal landscape. Certainly, this Bill is no joy to the businesses and people who are affected as the Government has now placed a cloud of uncertainty on many of the common place agreements, not least of which are the joint venture agreements, pooling of resources agreements and mergers that essentially were meant to help local businesses take on regional competition. No doubt, lawyers like myself now will be having a field day busy reviewing many of these agreements. I am sure that for many, they will find an excuse to review contractual positions which are unfavourable at this moment in time. My concerns are that in applying this Act retrospectively, the Government may have unwittingly opened

the Pandora's box and let the genies out for which they may have a hard time trying to put them back in. I would therefore urge the Government to tread carefully on its decision to apply this Act retrospectively.

Subject to the above comments, Sir, I support the Bill.

Mr Deputy Speaker, Sir, with the exception of one totally irrelevant speech from a Member who has totally disappeared, I would like to thank all the many Members of this House who have shared the benefits of their wisdom and experience and their thoughts on this piece of legislation.

This is a significant step in our legislative and regulatory framework for businesses. It is one which we are taking boldly but carefully. And I was most pleased to hear Mr Inderjit give us seven out of 10. He says that by his standards, it is very good. I think seven out of 10 also illustrates the point that we are going forward but we want to make sure we evolve this and get the sequence and the pace right.

Let me now touch on the various themes that Members of this House have brought up. I was struck by Mr Iswaran's point that competition does not equal competitiveness. It is worth reflecting on this because the purpose of this piece of legislation is to ensure that we have an efficient functioning market in Singapore and, ultimately, a competitive economy with competitive firms. Merely creating the forms of competition is not sufficient. And, in fact, although this is called the Competition Act, we must remember that this is a means to an end.

The next point which I want to put to the House is that I said earlier in my speech that we are a small but open economy, and that has certain implications for us. Firstly, it means that

we cannot just copy everything wholesale. Although I have said that we have modelled our legislation on the UK Act, we have had to make significant changes and modifications. Another implication of a small and open economy is this need for extra-territorial provisions. Our intent cannot be and it will be impossible to regulate the practices of big multi-national companies, big overseas firms who happen to have a small presence in Singapore. But, nevertheless, we do need to send a message that we do not want dominant firms, whether they be local or overseas firms, to engage in predatory and unfair behaviour within Singapore shores. As to the action we can take, obviously, we will have to confine our actions to the presence within Singapore.

Another point which Mr Iswaran brought up, and I think it is worth reiterating, is that regulatory cost should be kept to a minimum. Every well-intentioned piece of legislation, every well-intentioned new rule, new entity, new regulator will lead to increased cost. So I urge this House to be mindful, as we have been mindful at MTI, to make sure we balance the cost versus the benefits.

One example of this, I will discuss later, is when we talk of the need for sectoral exclusions, because we want to avoid unnecessary duplications, unnecessary cost and unnecessary confusion to the firms and businesses which have to operate under such an environment.

Mr Leong Horn Kee, Mr Iswaran, Mr Ang Mong Seng, Mr Inderjit Singh, Mr Sin Boon Ann and, in fact, practically all of them have focused a lot of attention on the exclusions. The first point which I want to put to Members with respect to exclusions is that exclusions from this Competition Act are not meant to protect the companies or the sectors so excluded. I think it is worth reiterating it. Excluding companies and undertakings from the

Competition Act is not meant to protect them from competition.

Let me go through it in a little bit more detail. Clause 33(4) of the Competition Bill provides that the competition law will not apply to any activity or agreement entered into or conduct on the part of the Government or statutory bodies created by Parliament or any person acting on behalf of the Government or statutory bodies in relation to that activity, agreement or conduct. Why do we do so? Because, unlike Mr Steve Chia's irrelevant rambling, we are trying to regulate the conduct of market players in an economy. This is not meant to fetter the discretion or indeed the obligation of the Government to make policy and to perform public functions. Hence, policies and actions taken by the Government and its statutory bodies do not and should not come under the ambit of the proposed competition law. If there are problems with the policies and the actions of the Government or its statutory bodies, the correct venue and the ultimate tribunal for this is this House, and ultimately the electorate. So, do not resort to petty tools like saying "I can use the Competition Act to regulate political and public policy objectives and actions."

Having said that, however, I have also said earlier in my speech that this Bill will apply to commercial and economic activities carried out by private sector entities in all sectors regardless of whether it is owned by a foreign entity, a local entity, Government or statutory body. So all these anxieties about Temasek-linked companies or indeed private limited companies owned by the statutory bodies are misplaced. The anxieties are misplaced because we intend that all these companies will come under the ambit of this law.

The next point is the list of exclusions set out in the Third and Fourth Schedules.

Before I enumerate the sectors, let me first describe the process by which we arrived at this list. There was a lot of consultation between Ministries and regulatory agencies and with businesses. And we decided that some exclusions are needed on the basis of public interest considerations - national security, certain aspects of defence, strategic interests. The areas which have sectoral exclusions right now, let me read that out to Members - piped potable water, waste water management, scheduled bus services, rail services, cargo terminal operations, armed security services, media clearing houses activities, gas, electricity, telecommunications, ordinary letter and postcard services. If Members stop to think about this list, does it not sound very familiar? It sounds very familiar because these did not start as private sector competitive markets. These started as monopoly services provided for public good by the Government. Now, the first change that occurred to these sectors was not the Competition Act but the fact that the Government, as a matter of policy, decided that, where possible, we would introduce competition into these sectors. And the evolution of competition in these sectors occurred through liberalising these sectors and creating sector specific regulators. For instance, if we talk about telecommunications, IDA is the regulator. For media, there is MDA. For energy, there is EMA and so on and so forth. The point is that these are highly specialised sectors with very unique and different starting points, and we were actually converting monopolies and forcing them to open up and create a competitive element.

Sir, if you are starting from that point, I think you will agree with me that there is a need for, first, much more active intervention and regulations. Secondly, there are deep and significant technical, public policy and strategic interests involved in these decisions. Hence, it

would be dangerous to try to open up these sectors without sector specific regulators who know the rules of the game, who know the technical issues and who can then best manage both the competitive and the technical issues as and when they clash, as sometimes they will. So the point is we are not afraid of competition. We do want competition and we do want competition in these so-called excluded sectors. But we want to ensure that it evolves in a correct, safe and appropriate way. So please do not run away with this misconception that this Competition Act, by excluding these sectors, is meant to protect these sectors. That is absolutely not the case.

Next, I want to move on to the related issue of sectoral regulators. Many Members have brought up the issue of whether there is a danger of uneven standards, different procedures, different fines even, as Mr Iswaran brought up. Well, I would say that in an ideal state,

we would certainly want to evolve to a common standard. And I think if you accept the fact that the general direction is clear and this is a piece of legislation which is evolving and really needs to be practised and refined as it goes along, then you would agree with me not to rush this congruence, although the long-term direction must be congruence and coordination.

But there is an important sub-point related to that. If you wanted to create more confusion for the market, then you would tell, for instance, the generation companies that they are subject to both EMA and the Competition Commission. So we have deliberately decided at this point in time, to keep it quite separate so that you know who is your regulator, you know what are the fines you are exposed to, you know what are the strategic issues that the Government or the regulator is concerned about, and you have some certainty to get on with

reforming your sector and delivering your services in the most cost-effective way.

The next sub-point on this issue of exclusion I want to emphasise is that these exclusions are not permanent. As I said earlier, this is work-in-progress. In fact, if you read carefully the way we have crafted the legislation, the Competition Bill acts as a kind of a default vehicle so that if at any point in time we decide, for instance, that there is no need for regulation in telecommunications or energy, or whatever the case may be, because it will no longer be regulated under a specially created regulator under written laws, the default mode would be that it would come under the ambit of the Competition Act. So the very way we have crafted it - some Members have raised it - the wording seems to be a bit general and broad, but the intent is that eventually more and more of these sectors will come under direct regulation of the Competition Act.

I want to say a few things about abuse of dominance. We are not against big companies. We are not even against dominant companies. In the nature of a small economy like ours, some companies will grow very, very big, and will have a dominant position. What we want to prevent is abuse of that dominant position. In fact, if you look again carefully at our legislation and compare it to other jurisdictions, we have defined it in a more difficult but ultimately more useful way. I will give you an example of that.

The Competition Commission has to find that a certain anti-competitive act or certain abuse of dominant position has actually led to a distortion, reduction or elimination of competition before it finds that this activity has transgressed the provisions of this Act. Let me try to explain that in greater detail. It is much easier to craft a legislation to say that specific acts are illegal. Instead, we have said the act is illegal only if it is performed

and it has impact on our local economy, which actually puts a higher onus of proof on the person or party who wants to allege that a certain company has engaged in anti-competitive behaviour, and the Commission then has to find it accordingly. So, it is not being done in a haphazard, slipshod or easy manner. It has been done very, very carefully.

I was intrigued by the fact that when we started talking about the Competition Commission, there were so many suggestions. Mr Leong Horn Kee said that it should just be a department. Mr Ang Mong Seng, Mr Inderjit Singh and Mr Sin Boon Ann all stressed the need for independence. And I think two of them said that it should be a tribunal, and they argued eloquently why it should be run by lawyers, rather than businessmen. Without getting into an ideological debate, we agree with Members that there is a need for independence, there is a need for integrity, and there is a need for integrity and impartialness to be seen as well. That is why we decided to create another statutory body. Yes, there will be some costs incurred in setting up another statutory body. But I think Members have to agree with me that we felt this was important enough to create a statutory body that whilst it may be supervised by MTI, it is not just another department or another policy arm of the Ministry of Trade and Industry. I can assure Members that we will keep it as small as possible. But we will ensure that the people who staff it are well qualified and know what they are supposed to do and will not waste time.

I also take Members' points that there is a need for this Competition Commission to make decisions in a timely way. As some Members have said, you do not want vexatious and frivolous comments or allegations to come in and keep things in limbo, and result in unnecessary friction

and paralysis for the real businesses pursuing their objectives. These sentiments of this House will certainly be transmitted to this Commission when it is created and we will do our best to make sure they do. We will do our best to make sure we equip them with the staff, investigative and enforcement powers, so that they can make their decisions quickly, efficiently, but fairly.

I also take Members' point that, if you just look at this legislation as it is, people need more information. They need more definitions. They need more education. And that is why, if Members read carefully our implementation roll-out plan, on 1st January 2005, if this House approves this piece of legislation, the only thing that will come about is the Competition Commission. This Competition Commission then spends the next 12 months issuing guidelines. And it is not going to unilaterally issue guidelines but to discuss with all the stakeholders, because these are complex issues which none of us on our own have a monopoly of wisdom on. So those 12 months are meant to provide a period of intense consultation, the drawing up of guidelines so that, as Mr Inderjit Singh said, our businesses will have greater certainty as to how this law will operate.

Assuming this goes well, then on 1st January 2006, the provisions which will basically prohibit anti-competitive agreements and abuse of dominant position will come into effect. The more complex prohibition on mergers and acquisitions, we anticipate, will take two years before we put it into effect, and that is because we feel we need more time to consult and arrive at workable, sensible guidelines and modus operandi which the businesses understand.

There has been concern about the retrospective provisions. I think I can quite understand all lawmakers' concerns with retrospective provisions. We thought

long and hard about this. One alternative would have been to just grandfather all the current agreements, but there are dangers with doing that. First, we did not want a flurry of agreements to be made because people knew they could slip it through the grandfather's net. Secondly, there may really be current agreements that do need to have their provisions relooked at and reviewed, in order to move our economy to a more competitive phase. After all, we said this is meant to move our economy up one quantum step.

As to how we are going to do it, again, the key word is "carefully". For agreements which have been in existence for more than five years before the Competition Act comes into operation, we will allow the companies to apply to the Competition Commission for more time, or a longer transitional period, so that they will have time to negotiate, renegotiate or amend those agreements so that they will comply with the requirements of the Competition Act. In any case, we are not repudiating all agreements. We are saying only those provisions which infringe the tenets of the Competition Act would, if complained about and if the Competition Commission finds against them, be held to be null and void. We are not saying everything is to be thrown away and everything has to be renegotiated. Yes, there will be a bit more work for Mr Sin Boon Ann, but I hope it will not be very much work for him.

Related to this also is Mr Iswaran's point about frivolous and vexatious complaints. Again, if you look at the way we constructed it, if someone complains to the Competition Commission, it is not the same as if he has gone to a court of law and filed an affidavit against you. Because it is the Competition Commission's own discretion to decide whether there is or there is not a bona fide case that merits investigation, decision and ultimately enforcement. So, again, if we have a properly constituted,

properly qualified and equipped Competition Commission, this should expeditiously filter out vexatious and frivolous complaints.

Mr Chiam was a bit confused, I am afraid, with respect to the role of the District Court and the Competition Commission. In clause 69, it refers to the sanctions which the Competition Commission can impose on businesses for infringing the prohibitions listed in the Bill, and the Bill provides that no financial penalty may exceed 10% of the annual turnover for up to a maximum of three years. Clauses 82 and 83 that Mr Chiam referred to refer to offences that would be committed by people who do not cooperate with the Commission in the course of its investigations or in its attempts to enforce its actions. So, I am afraid, they are two completely different issues. You will not get a situation of people saying, "Am I going to be fined by the District Court, or the Competition Commission can find against me?"

Perhaps it is worth reiterating the process. If the Competition Commission finds against you and if you disagree, you then have recourse to appeal to a Competition Appeal Board. Mr Sin Boon Ann will be glad to know that the chairman of the Appeal Board will have to be a lawyer who is qualified to be on the Supreme Court. I think that means he must have at least 10 or more years of practice. So the lawyers will still have a role in this process. If you disagree with the decision of the Competition Appeal Board, you can still appeal to the High Court on points of law and on the quantum of the penalty or sanction levied against you. And if you disagree with the findings of the High Court, you can then go to the Court of Appeal.

So, you can see that we have taken the trouble to set up a proper system with proper checks and balances and a right

balance between business and law. But I want to conclude by saying that if you look at what other jurisdictions have done - I think in the case of the UK, it has been several decades that they have been working on competition law and evolving it, and the most recent legislation of 1998 which we have looked at - I have no illusion that this is a big first step, but it is a first step of a much longer journey, and one which we have to go into with our eyes open, clear-headed leadership, and sensible people of integrity operating the system.

Mr Deputy Speaker, Sir, the Minister has not addressed the point that I have made and, that is, to promote competition. You will discover that there are a lot of Government policies and practices which may stand in the way of effective competition. How do we handle those issues and whether there will be coordinated review of all these practices and policies?

Thank you for that reminder. There is a big point and there is a small point in response. On the small point first. Technically, I would just like to inform this House that car dealers will be subject to the Competition Act. So there is no question about them escaping the coverage by this Bill. With regard to his specific point about why there are apparent variations in OMV valuation by LTA or MOF, I am sure LTA and MOF would quickly look into this. And if there is really a loophole, I am sure they will address it.

The bigger point is, in fact, that there are times when the goals of public policy may need to trump the market and that is why this Competition Act should not be an overarching blunderbuss law that acts to fetter all other exercises of Government

or statutory bodies. So I am saying that we need to be very clear that where this is business and where this is going to lead to an efficient functioning of the market and more competitive firms, we use this more appropriately. In other circumstances where there are other policy objectives, then we do so. But when we do so, this Government is very aware that every regulation, every tax, or every new rule that we promulgate in pursuit of a public policy objective may, and very often, have market impact as well. And we need to balance the impact of that rule versus the impact on the way the market functions. And I will assure this House that this Government is ever mindful of that and we will not unnecessarily be so pig-headed about it that we will just impose a system and ignore the impact on businesses. But this is something which we will have to feel our way and cross each bridge as we come to it. So please do not treat this Bill as a panacea or as a solution for all ills, real or perceived. Otherwise, we will end up like Mr Steve Chia who thinks this Bill is going to be used to reform the political system.

Sir, my question is: will the Commission take up the issue with the relevant regulators to see that, in fact, there are greater purposes in having a certain policy at the expense of competition to satisfy themselves which is, indeed, the case?

I think this is something which will have to be sorted out later on, especially during the process of generating the guidelines. But the general principle is that if the Competition Commission is satisfied that there is a problem in which there is an unfair market practice, distortion or restriction of competition ---

Due to Government policy.

--- then that dialogue must occur between the agency and the Competition Commission. But I would not accept the position that competition must trump at all costs.

I did not say that.

There are public policy objectives which, sometimes, we must impose.

Taking the point from the Minister, I would also like to ask him the question which I posed about the proposed merger of SPH and MediaCorp where, in fact, it did not give rise to competition but a monopolistic body will be formed.

I am almost tempted to ask the Minister for MICA to answer that. Anyway, that question was asked and answered during the Question Time earlier today. Again, all I would say, at this stage, is that there are only two points. That is a sector which does not come under the ambit of the Competition Act. It is regulated by MDA. And these issues which the Member has raised should properly be resolved by MDA. But I would like to reiterate what the Minister said, which is that the Government has not reversed its position on openness to competition in the media sector.

The other point which he made, and I think is worth reiterating, is that we cannot insist on competition at all costs. Let us not forget that at the end of the day, this is a business that needs to be run and a business that needs to be viable. To blindly insist that you must keep the appearance, the form of competition at all costs even when it does not make business sense would be wrong. It would be wrong for the Government to insist on that and for the Government to impose that on listed companies.

May I just ask the Minister? I appreciate the explanation given on why the Government has chosen to maintain sector-specific bodies and striking a delineation between those and the Competition Commission. But my reading of the Bill is that there are certain parts of the Bill, I think clauses 33 and 61, which give the impression that the Commission would have certain powers to enact or prescribe codes that would impinge on those sectors. So there appears to be a contradiction there that the Government's policy intent is to decouple, but the drafting of the Bill suggests that there might actually be an overlap. So I do not know whether the Minister can give a clarification now.

Thank you for the question. It is a good question. If you read carefully the clauses he is referring to, it provides for consultation to occur between the Competition Commission and the regulators in those sectors. And his next question should be: why is there a need for any consultation? There are two reasons. First, as a general rule, we want to ensure that we are moving forward in the same direction and aiming towards some future congruence. That is not something which we want to specify or lock ourselves into. But the other more important reason is that we have also said that where the companies in that sector get involved in cross sectoral businesses or, indeed, engage in businesses outside that sector, then the Competition Bill must apply to them. So there will be circumstances when a certain amount of coordination and dialogue is needed between the Competition Commission and the regulators of those sectors.

Question put, and agreed to.

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