Hansard, 2004-11-17

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) Ms Indranee Rajah 17 Nov 17 Nov Mr Ong Ah Heng 17 Nov 17 Nov Mr Steve Chia Kiah Hong 21 Nov 02 Dec Mr Othman Haron Eusofe 26 Nov 28 Nov

ABDULLAH TARMUGI Speaker Parliament of Singapore

[Mr Speaker in the Chair]

1. Dr Amy Khor Lean Suan asked the Minister for Home Affairs how Took Leng

How could have slipped out of Singapore undetected and whether this implies that there is some lapse in border control that has to be tightened.

2. Mr Steve Chia Kiah Hong asked the Minister for Home Affairs (a) what are the causes which enabled Mr Took Leng How, whose passport has been impounded by the police, to slip out of Singapore despite the tightened security checks at our borders; (b) whether there are any other unreported cases of people who managed to slip in and out of our CIQ checkpoints successfully; and (c) whether there are any audit checks carried out to ensure that such incidents do not happen again.

Mr Speaker, Sir, may I have your permission to take Question Nos. 1 and 2 together as they are related?

Yes.

Mr Speaker, Sir, the Police is currently concentrating their efforts on the investigation of the murder of Huang Na. Once investigations are completed and the case is tried in court, a clearer picture on many details, including how he left Singapore will be known. For now, we should let Police carry out its investigations.

Sir, let me assure the House that we treat the security at our checkpoints seriously. Since September 2001, security checks at all our checkpoints have been stepped up. These efforts have paid off by deterring people from sneaking in or out through our checkpoints. The Home Team arrested 81 illegal immigrants trying to enter Singapore through the land and sea checkpoints in 2003, a decline of some45% compared to the 147 arrested in 2002. 154 immigration offenders were

arrested trying to depart Singapore from the land and sea checkpoints in 2003, a decline of some18% compared to 187 arrested in 2002.

Sir, to ensure that the checks at the checkpoints are robust, Police and the Immigration and Checkpoints Authority (ICA) regularly carry out intrusion tests to critically assess and test the security performance of our checkpoints. After Action Reviews are then conducted to draw learning points for improvement.

I would like to ask the Minister whether the Immigration and Checkpoints Authority was alerted to the fact that Took was actually called up by the Police to assist with the investigations of the case.

Sir, like I have said, the case is still being investigated and the case will come before the courts.It is better for that process to be completed before we discuss any details.

Sir, has the Ministry been monitoring the snakeheads operating in Singapore who are ferrying people in and out of Singapore illegally?

Sir, as Mr Chia knows, we are mindful that we have to target snakeheads, not only illegal immigrant offenders. Where possible, we also try to smash syndicates, as recently happened in a case, not in Singapore, which involved a Malaysian in Malaysia.With close cooperation, we were able to smash that syndicate. So, definitely, this is one of the points that ICA and Police will look at.

Sir, I note the Minister's reply that investigations are still underway. But regardless of this, because of the

possibility of his having escaped through the border, was there any tightening of border control measures after this incident?

Sir, as the House knows, we take our border security seriously. And, indeed, particularly after September 11, many measures have been implemented to tighten our borders. As of now, following our assessment, whatever gaps that may appear, arising from Police investigations, have been closed up.

Sir, sinceborder security has now been tightened,how can anybody actually manage to sneak out of Singapore?

Sir, we are entering into the realm of the details which, I think, we should leaveaside until after investigations are completed and the case is set in court.

The following Question stood in the name of Mr Zainudin Nordin -

3. To ask the Minister for Home Affairs (a) how long are the records of traffic offenders (i) who have not paid their fines and (ii) who are wanted under an arrest warrant stored in his Ministry's databank; and (b) how is it possible that some traffic offenders who surrendered themselves on an arrest warrant and later paid up all their fines, can still be served subsequently with outstanding arrest warrants.

Question No. 3, Sir.

Sir, any traffic offender who fails to pay a composition fine by the expiry date, as reflected in the Notice of Traffic Offence, will be issued a notice to attend court to answer to the

charge preferred against him. If he fails to show up in court, a warrant of arrest will then be issued against him. The records of these outstanding fines and warrants are kept by the Traffic Police until they are dealt with.

When a traffic offender surrenders himself to the Traffic Police, the Traffic Police will ensure that all his other outstanding traffic offences are dealt with concurrently. This is so that he will not be unduly inconvenienced. Nonetheless, it is possible that an offender who has paid up his fine for a traffic offence can still be issued a warrant of arrest subsequently. Let me explain.

Take the case of a traffic offender who fails to pay the composition fine by the expiry date and also fails to attend court to answer the charge. The court will then issue a warrant of arrest against him. He subsequently surrenders himself to the Traffic Police and submits an appeal. The Traffic Police, in consultation with the Attorney General's Chambers, decides to re-offer him the option of compounding his traffic offence by paying a fine, which he does. In this case, even though the offender has already paid the composition fine for his traffic offence, he will still be required to attend court to show cause as to why he failed to attend court in the first place. If he fails again to turn up in court, another warrant of arrest will be issued against him.

The following Question stood in the name of Mr Zainudin Nordin -

4. To ask the Minister for Education with the investments and effort to introduce IT, eLearning and early exposure of our students to computers and software in schools (a) what are the improvements in education and learning; (b) what are the key progresses of these

initiatives; and (c) whether his Ministry allows students to leverage on their IT skills for the key examinations like the GCE 'N', GCE 'O' and GCE 'A'.

Question No. 4, Sir.

Sir, IT is a key enabler for Singapore to remain competitive and meet the challenges of the knowledge-driven future. MOE launched the first IT Masterplan in education in 1997 to put in place the necessary infrastructure to enable our schools to leverage on IT to enhance the learning experience of and to better prepare our students for the future.

With the successful implementation of the first IT Masterplan, all our schools are now connected to the Internet and ready for other IT enabled learning. All our teachers have also at least acquired the necessary basic knowledge and skills to integrate IT into the curriculum.

The IT-enabled school environment is conducive for our students to participate in active learning. With the use of IT, our students are now able to go beyond the four walls of their classrooms.For example, we have students in 20 schools who were involved in a project that tackled the problem of dengue fever. This project required our students to collaborate with a specialist from Vietnam as well as our Ministry of the Environment. They analysed data, evaluated information and created knowledge using personal digital devices as well as the Global Positioning System (GPS).

Many of our students have acquired not only basic digital literacy but sophisticated IT skills like web publishing, video-creation and computer programming. Many of them have also excelled in local and international

competitions like ThinkQuest International and International Olympiad in Informatics. In fact, they are better than us adults in many instances.

With the launch of the second ITMasterplan in Education, we are beginning to see a variety of school-initiated IT-based programmes to support niche areas in the schools such as in inquiry-based learning and life-sciences. MOE, schools, industry partners, and Institutes of Higher Learning (IHLs) are collaborating on experimental projects to push the frontiers of innovative ways of using IT for teaching and learning. One example is the use of knowledge forum software, an online discussion forum, to bring about engaged learning for our students.

On assessment, students make use of their IT skills in the coursework and practical components of the N-level Computer Applications examination. Students also leverage on their IT skills for research, processing of data, presentation and collaboration in Project Work at A-level. In the A-level Computing examinations, studentsalso make use of application software for computer-aided designs, database management and web publishing in the coursework component of the examination. MOE will continue to explore new ways of using IT in assessment.

Sir, I am pleased to note that many of our children have benefited from and do excel in the use of IT. But I am sure the Minister would agree with me that a large number of children, maybe due to financial reasons, do not have an IT-friendly atmosphere at home and therefore may be left behind, compared to their classmates who have computers at home and attend computer enrichment classes. Does the Minister observe that there is a widening IT divide among our children? And if there is such a growing divide, what is the Ministry's policy on

this? Whatactions does the Ministry intend to take?

That is why the Ministry introduces IT in a relatively cautious manner. We only introduce IT that has good education application. Also, thetechnology introduced has got to be mature and also affordable. For students who are unable to afford their own computers,wearrange for them to make use of the facilities in school, for example, in a computer laboratory.

We also have certain schools which introduced their ownIT projects. For example, Crescent Girls' School introduced IT teaching programme using the tablet PC.In this particular case,the schoolhadconsulted all stakeholders, especiallythe parents. Nearly allagreed tobuytablet PCs for their children. In the case of the few who were unable to afford, the school was able toarrange for the tablet PCs to be loaned to them. So the school went all outto make sure that students do not lose out because they were unableto afford the PCs.So just to assure the Member that affordability and availability of computers weretaken into consideration before IT projects were introduced.

I would like to ask the Minister whether the Ministry will consider making such facilities accessible at community clubs and community centres, so that on a more macro level we can better reach out to students who are living within the community.

Community centres and community clubsare not under the care of the Ministry of Education. But suffice it to say, we also have other voluntary organisations, like the community self-help groups, MENDAKI, CDAC,SINDA as well asthe Eurasian Association, which do have schemesto allow the students to have access to

computers. Theyinvolve many volunteers to help, for example, to service old computers. Computers made available through such channels, pluscomputer facilities available in schools have,for the time being, beenadequate to caterto our students.

Sir, having all these efforts in IT, do we seea need for our students to be allowed to use the skills that they have acquired for important examinations? And if that is the case, is there any situation where students are not allowed to use the skills for examinations, like presentations or whatever?

If we are introducing the use of computer in an examination, we must, firstly,make sure that all students have access to computer at that examination.There isthis issue of IT divide between the students who have and whodo not have a computer. So,for the time being, the use of computer in examinations is confinedto computer-related subjects, like the subjects that I have listed during my oralanswer just now. To the extent thatcomputer becomes more accessible and more affordable, there will be a wider use of computer in examinations.

Could I ask the Minister whether the Ministry has any scheme of identifying children who would appreciate a computer at home and looking for the means to help them get that computer so that we bring more people on to the same level to level the playing field?

As I said, if the students do not have a computer at home,there are other channels to help them, such as the community self-help groups.Our schoolshave also been helping students to getin touch with the

various channels. In certain instances, the schools may approach some charitable organisations to make available additional resources. All these are being done.

Do we know the number of school children who may not possess a home computer? Is there any study done in this area? Are schools opening up their school laboratories so that, after school hours and on weekends, children who need to do their homework or browse through the Net to do whatever research, they are made available to them?

Opening of computer laboratories in schools after school hours or during weekends are decisions that can be taken by the schools. The Ministry does not have a directive to direct the schools to open their computer facilitiesat certain hours. But I am confident that if it is for the good of the students, the schools will make those facilities available.

As for the study thatthe Memberasked for,I do not have the information with me. But we canget certain indications on the penetration rate of IT in families. I think yesterday, during the Second Reading of one of the Bills,it was mentioned thatmore than half of our families now have access to Internet. So if thereis access to Internet,they must have access to computers. But I think these are not the people that she is concerned about. She is more concerned about the people who are really not able to afford having a computer at home for the use of their children. As I have said earlier, there are various groups who have schemesthat try to cater to the needs of these children. And as far as I know, the provision currently is adequate.

Sir, I appreciate the concern about the digital divide. But

at the same time, I am also concerned that with the kind of investment and the kind of money that we have beenputting into IT, whatis the level of achievement we expect from our students? If we want them to attaincertain IT skills and we want them to apply, how can MOE assistthe students to apply their skills that they have acquired in this training atimportant examinations, like GCE 'N', GCE 'O', and so forth? I would prefer for us to be able to level up than level down.

Iwould acceptMr Zainudin's pointgenerally. But I would want to say that there are certain areas of assessment that we are actively exploring the possible use of IT. One of them is actually in the area of oral examination. Nowadays, there are computers which can recognise pronunciation and voices. A natural question iswhether suchcapabilities can be used to help in theassessment for oral examination, especially those relatively objective types of oral examination. I am not talking about, say, free flow conversation. Oral examinations involvingmultiple choice or reading from a fixed passage could conceivably be assessed by computer.This is one area that we are actively looking into.

I would also want to say that IT in teaching goes beyond just examinations. IT allows students to practise a certain skill repeatedly in order to improve. For example, students can do repeated practice ofmathematics, or repeated practiceof reading ofpassages. A computer is actuallyvery patient. You can make the same mistake many times. The computerswill patientlycorrect it for you.These features are already available in our computer laboratories.Hence,the use of IT in education is manifold. It goes beyond assessment. And I think our children are benefiting from these capabilities.

5. Mdm Ho Geok Choo asked the Minister for Manpower (a) if he will update the House on the newly announced four-day work week and job sharing that his Ministry has implemented in its own set up; and (b) what are some of the guidelines that have been drawn up to assist corporations to better identify operations that can support a four-day work week.

My Ministry is not promoting a 4-day work week, as wrongly headlined in a recent press report. We have clarified this to the newspaper. What MOM has put in place are flexible work options, such as flexi-time, telecommuting, working from home, job sharing and part-time employment.

Like many other companies with flexi-time, some MOM officers start earlier or later than the official starting time of 8.30 am. For other options like telecommuting and part-time work, approvals are granted selectively for limited periods and when the performance and productivity of the officer and his or her division are not compromised. Currently,about 1,080 staff in MOM, 9 or 0.8%, are on these schemes, and they aretypically mothers.

In view of the competitive environment that we are encouraging in Singapore and the recent calls for flexibility in our work patterns, will the Ministry actually be working out some schemes to provide some guidelines on how flexible working hours or flexible work week can actually be implemented in organisations?

Flexible work arrangement is practised widely in the

industry. The Ministry would not want to prescribe a certain formula for different industries and companies to subscribe to. What we would like to see is arrangement that would be mutually beneficial to both the employees as well as the employers. So as long as the rights of the workers and the interests of the companies, as a whole, are well protected and taken care of, we would encourage different kinds of flexi arrangements.

6. Miss Penny Low asked the Acting Minister for Community Development, Youth and Sports, givenhis Ministry's aspiration to promote social entrepreneurship in Singapore, (a) what progress has Singapore made; (b) what help is given to people who want to start up social enterprises; and (c) whatis the profile of the social entrepreneurs and enterprise in Singapore, especially those set up in the last two years.

Mr Speaker, Sir, Miss Penny Low has asked about Singapore's progress in promoting social enterprises. First of all, let me define social enterprises as ventures that use business practices to achieve a social mission. Profits earnedare re-invested in social causes, rather than to maximise the owners' gains. Some local examples would be the "Mister Clean" cleaning service that employs ex-offenders, and the airline headset recycling service offered toSIA, which employs the intellectually disabled.

Social enterprises like these are not yet widespread in Singapore, but they have slowly gained some ground.

MCYS wants to encourage the growth of more social enterprises. This is because the revenue from social

enterprises would enable social service agencies to be more self-reliant, and less dependent on donations to fund their social causes.With this additional source of fund,social service agencies can do even more than what their donations could allow them to. As a positive spin-off, social enterprises can also create jobs for groups who would normally face difficulty in finding meaningful employment.

Those who want to start social enterprises may be able to get seed capital through my Ministry's Social Enterprise Fund (SEF), which started in March 2003. The objective of theSEF is to encourage the social service sector to look at possible business projectsas another avenue for raising funds.Over the longer term, we hope that theSEF will help the social service sector to be more self-reliant, financially sustainable and innovative.

To date, about $3.4 million has been awarded from the Social Enterprise Fund to support 33 projects. From these approved projects, 23 have started operations.

64% of the projects are started by Voluntary Welfare Organisations (VWOs), with the remainder mostly by businessmen supporting a social cause. Many of the VWO-driven projects involve partnership or guidance from the private sector.

One example is Killiney Kopitiam, which helped Teen Challenge to set up a Killiney Kopitiam franchise, with a waiver ofits franchise fee. Profits from this venture are used to further Teen Challenge's social missionin re-integrating ex-drug addicts.

Another example is apublic sector-privatesector collaboration between

Bizlink, a non-profit organisation providing job-matching services for the disabled, and Trusted Hub, a member of the Singapore Technologies Group. They have set up a data entry centre, which provides job opportunities for the disabled.

Besides giving funding support, MCYSassists start-up social enterprises by linking them with potential mentors, such as experienced businessmen and established social enterprises.

We also build awareness of this concept of social enterprise through public forums and the media. MCYS has promoted the Social Enterprise Fund to social service agencies under the National Council of Social Services, National Volunteer and Philanthropy Centre, NUS, SMU and Singapore International Foundation, and so on.

Miss Penny Low asked about the profile of social entrepreneurs and social enterprises in Singapore. The Ministry does not have comprehensive data on this. But based on the projects that we have funded, social enterprises span across various businesses, including foodand beverage, car polishing services, cleaning services and data entry services, and so on. The beneficiaries include ex-drug addicts, ex-offenders, the disabled, the elderly, delinquent youths and those who are chronically unemployed.

Mr Speaker, Sir, while the status of social enterprises has grown, it is still in its infancy. Besides MCYS, the community can also help develop social enterprises in various ways; companies can consider social enterprises as potential business partners, while businessmen can share their expertise, resources and connections. So we hope that we will have a "many helping hands" approach to improve supportforthis socialmission in the future.

Sir, I am very happy to hear the Minister of State detailing the social enterprises that started in the last two years or so. I am also aware that wehave still got a long way to go, in terms of learning the best practices of running social enterprises. Has there been any effort on the part of MCYS to come out with some guidelines or to liaise with even international social enterprises and run even MTI-like programmes, like Blue Sky, to link up the aspiring social entrepreneurs and the existing social entrepreneurs?

Miss Penny Low has given a very good suggestion. Like I just mentioned,we started last year, in March 2003, and now we have 33 projects. So we do havecompanies, especially some GLCs and voluntary groups that are tryingto work together. Lately,the grassroots organisations, likethe Pasir Ris grassroots leaders, have also started the "Aunty Clubs" tohelp some of the unemployed aunties. So I think social enterprises cover a very wide spectrum. The most important point is that, ultimately, whatever we do, we should remember these three objectives. One,the mission should be very clear,ie, whatever profits we have should be ploughed back to support the social mission.Second, the project should be commercially viable and sustainable. And,ofcourse,third,

we examine theleadership, ie, dowe have a team of people, the drivers, who are prepared to help them to make sure that these businesses aresuccessful? If these threecriteria are met, please come to the Ministry and we will look into their applications.

I would like to ask the Minister whether there is a difference between a VWO cooperative and a social enterprise. What are the main differences? In other words, can the business operations of a VWO cooperative

in a way be classified as the business operations of a social enterprise?

Based on the criteria, an applicant should be a registered body in Singapore. This can include a company limited by guarantee, a society,cooperative or charitable institution. But the business partner can help the VWO to start a social enterprise.

Would the Minister also consider publishing a list of contacts of companies or corporations in Singapore which are interested to help out in social enterprises?

We will look into the various publicity channels.I think it is quite a good suggestion that maybe we should slowly compile a more comprehensive list of contacts to help those who are interested to do so.

7. Mr Ahmad Khalis Bin Abdul Ghani asked the Acting Minister for Community Development, Youth and Sports (a) in regard to the applications under the HOPE Scheme (i) how many applications were made since its inception, (ii) how many were successful, (iii) what were the main reasons for rejection; (b) does his Ministry consider the current take-up rate as too low, and if so, what can the Ministry do to improve it; and (c) will the Ministry consider relaxing one or two of the Scheme's many conditions in deserving cases.

Mr Speaker, Sir, the Home Ownership Plus Education (HOPE) Scheme is a programme to help young, low-income families move out of the poverty trap by providing them with

comprehensive forms of assistance. This voluntary scheme is meant to encourage the parents to keep their families small, so that they can concentrate their limited resources on their children and give them a head-start. Under HOPE, we will support these families with a package of assistance, including education, housing and training grants. Since the inception of HOPE on 1st January 2004 to 30th September 2004, we have received 630 applications, of which 375, or 60%, have been approved. The main reasons for the unsuccessful applications were because the applicants exceeded the income, education, or age criteria. The CDCs would always consider these unsuccessful applicants for other assistance schemes.

When HOPE was introduced, MCYS had set a target of 1,000 families to join the scheme by 2007.We had expected about 250 families to be on HOPE in 2004. This target was based on our estimate that about 3,400 families would be eligible for the Scheme. Based on our previous experience, we expected about 30% of these families to participate in the Scheme. Hence, the take-up rate of 375 cases so farwas better than our expectation. We will continue to monitor and promote the Scheme through a "many helping hands" approach, involving voluntary and community-based organisations, grassroots organisations, CDCs and relevant Government agencies.

As the Scheme has only run for about 10 months and the efforts at reaching out to the target families are still actively ongoing, it is premature to review the qualifying conditions of the Scheme. We will ensure that the scheme continues to benefit the families that it is targeted at.

I was wondering whether the expected

30% take-up rate from the 3,400 families that should be eligible isa little too low and that more efforts should be made to reach out to the remaining 70% who should be coming in.

I am sure that Members know that the HOPE scheme was more or less readjusted from the previous Small Families Improvement Scheme. That scheme was not very popular. Every year, less than 100 persons apply. When we introduced this new HOPE scheme, we also adjusted some of the benefits. For instance, we extended the bursary to pre-schools as well asuniversities, and we also give them some mentorship support as well aslife-skills. Hence, this scheme is quite popular, compared to the Small Families Improvement Scheme, which has only a 14% take-up rate. So, compared to the 14% in the last few years,we thought maybe, fora start, let us set it at about 30%. But, of course, this is notfixed. We will review it from time to time. But this scheme has so farbeen in operation for only less than a year.

CouldI ask the Minister whether the criterion of having just two children is one of the deterrents? Is there a view on that? Doesthat criterionnot run contrary to the "Baby Bonus" policy where wedo not now put alimit on the number of children? If so, will there be any review?

There are no contradictions in these two schemes. The marriage and procreation package is to encourage married couples to have more children. So, those who want to have more than two children, they can apply under the marriage and procreation package for the baby bonus, etc. But the HOPE scheme is particularly targeted at those small and low income families. The parents' education should be two GCE "O" level passes and below,their combined income should be less than

$1,500, their families should be intact and so on. We hope that, by helping them, they can concentrate their limited resources on the children, spending especially on their education. Therefore, we extend the education eligibility frompre-school to includesecondary, high school, polytechnic and university education. We also give the parents training grants and hope that they can upgrade themselves. So, by providing a limitto two children, we hope that they can really pull themselves out of the poverty trap.

We alsohelddiscussions with this group of users, who themselves felt that the 2-childcriterionwasquite a reasonable cap for them. Beyond that, they felt they would bequite stretched.

Sir, would the Minister of State not agree with me that the main aim of this scheme is, as stated just now, to help families with difficulties to get out of the poverty trap? In that sense, would the Minister of State not agree with me that the low income level and low education level are but guidelines for us to administer this scheme? Therefore, if there are families which exceed these criteria by a little bit, perhaps three children instead of two, or three "O" level passes instead of two, and if they are still having difficulties, shouldthey also qualify for this scheme, bearing in mind that the aim of this scheme is to get them out of the poverty trap?

As I mentioned just now, actually we have many other schemes. We have the Kindergarten Financial Assistance Scheme (KIFAS). I am sure hon. Members are aware of thisscheme. We also have the Centre-based Financial Assistance for Childcare (CFAC) scheme, the WorkAssistance Programme (WAP), etc. So, we have other schemes to help those families with more than two children. Now we also have the marriage and procreation package, if they qualify for it.

I am sure every one qualifies, up to four children. There are so many schemes.

But theHOPE scheme has a particular objective, ie, to encourage the small familiesto concentrate their resourcesand hope that, because the family is small, they can pay more attention to their children andreally educate them well so thatthey can make a better living andmove out of poverty.

Hence, we have so many schemes. Those who are not qualified for this scheme, we do not turn them away. We will look into their situation and refer them tothe schemes which are suitable for them. But the HOPE scheme is only for this target group.

While I accept that there areother schemes available to help the poor and needy in Singapore,but, as stated earlier, the objective of this is essentiallyto help small families that arein need, and the question that is posed to the Minister is whether or not the Government is prepared to exercise flexibility in administering this scheme. I know in a situation like this it is very difficult. There will be some who will be left out of the net and others who are cast in the net. But if the Government can provide the assurance that it is prepared to consider the marginal cases, I think it will go a long way in helping the smaller families in need.

I think we are always very flexible. For instance, widows, we will also consider their applications. Sometimes, maybe because of certain reasons they want to upgrade their education level, we can consider. But for the number of children, we always encourage them to try not to increase more than that. If they really want to do so, we will refer them to other schemes. For instance, now we have the marriage and procreation package, which is also very attractive.

8. Ms Braema Mathiaparanam asked the Acting Minister for Community Development, Youth and Sports if he will consider implementing a reward scheme, under the Singapore National Olympic Council, for our disabled athletes who make it to the Special Olympics and who also show improvements, beyond their personal best records.

Mr Speaker, Sir, the reward scheme for able-bodied athletes who win medals at major games is a scheme under the Singapore National Olympic Council (SNOC), which is a non-government organisation. The SNOC has an arrangement with commercial sponsors for this reward scheme. The reward is only given to athletes who win a Gold, Silver or Bronze medal at the Southeast Asian, Asian, Commonwealth and Olympic Games. It is not given to athletes who show improvements beyond their personal best records.

The Singapore Disability Sports Council and Special Olympics Singapore are the two non-government organisations that represent athletes with physical and intellectual disabilities respectively. They can consider whether to work with partners to also put in place reward schemes to recognise the achievements of their athletes, if they so choose.

The hon. Member wouldbe glad to know that the Singapore Sports Council alsoprovides support to all athletes, including those with disabilities. For example, some athletes under the Singapore Disability Sports Council have received support from the SSC in terms of training assistance grants, medical insurance, and access to the SSC's sports science and sports medicine services.

Some Paralympians this year also received training grants from theSSC which led up to the Olympic Games. And, as Members would be aware, just yesterday, our President hosted tea for the team who participated in the recent Paralympics in Athens.

Could I ask the Minister what rolethe MCYS can take where the SNOC is concerned in rewarding disabled athletes when they win back medals? Is there any possibility of a reward scheme in that perspective?

Mr Speaker, Sir, in my answer earlier, I emphasised that the SNOC is a non-government organisation. It does not work under the direction of MCYS and this reward scheme is not done under the direction or behest of the Government. It is an arrangement which SNOC makes with commercial sponsors. In the same light, if the Singapore Disability Sports Council or the Special Olympics Singapore, through other non-government organisations, wishes to make similar arrangements with commercial organisations, they are entirely free to do so. But I want to emphasise that this is not something which is being done at the direction of the MCYS.

9. Mr Zainudin Nordin asked the Acting Minister for Community Development, Youth and Sports, with the impending demolition and redevelopment of the Kallang Stadium into a new and modern sports hub (a) how will it impact local sporting events, infrastructure needs of the National Sports Associations, regional and international tournaments; and (b) whether his Ministry will consider implementing intermediate level infrastructure or make significant improvements to existing infrastructure to fulfil the inevitable vacuum that will be created due to this big and long-term redevelopment project.

10. Mr Ng Ser Miang asked the Acting Minister for Community Development, Youth and Sports, now that the Sports Hub will be constructed under the Public Private Partnership Scheme and be operated by private company, how will this affect the completion date of the Hub, the design, the type of facilities to be included, the affordability to Singaporeans who wish to use the sports facilities and the rental rate to National Sports Associations and organisations who wish to stage sports events at the Hub.

Mr Speaker, Sir, may I have your permission to take Question Nos. 9 and 10 together as they are related?

Yes.

Sir, MCYS is in the process of structuring a Public Private Partnership (PPP) tender for the Sports Hub.We are adopting a PPP approach so as to tap on ideas from the private sector on how to design, construct and operate a landmark sporting infrastructure in a most cost-efficient manner.

We have appointed a financial and legal advisor to assist us in drawing up the tender specifications. We will request for tenderers next year and hope to appoint a PPP provider who will help to design, construct and operate the Sports Hub by 2006. The construction of the Sports Hub is expected to start in 2007 and, hopefully, willbe completed by 2010, which is the target completion date that we had initially set for the project. During this period, the existing National Stadium at Kallang will have to be demolished in order to make way for the new stadium.

We do not expect the National Sports Associations and the training of national

teams to be adversely affected during the construction of the Sports Hub, as none of them currently use the National Stadium for their daily training.We have many local and international events on our sporting calendar today, but not all of them make use of the National Stadium. These events will have to be held at alternative venues, such as the regional stadiums or the Padang during the transition.The biggest of these alternative venues is the Jalan Besar Stadium with 6,000 seats. In addition, the Chua Chu Kang Stadium can hold crowds of 4,000 currently, with up to 9,000 with additional temporary stands. For events that require even more capacity, the Padang can be used as an alternative venue.There are no plans to build a temporary stadium just for the transition period of three years, as this will clearly not becost effective.

The PPP approach will not compromise

the type or thedesign of the facilities for the Sports Hub. MCYS and the Singapore Sports Council will specify the types of facilities that should be provided, and set basic design parameters which theprovider will have to adhere to. We will aim for a design that befits a national sporting facility, but yet, it iscost-effective and operationally efficient.

The Singapore Sports Council will also specify certain service outcomes for the project, which will include a certain number of days which the sports facilities would be available for Government and community use. The Sports Council will also determine the appropriate rental pricing policy, and we will ensure thatfacilities remain affordable.

Sir, I would just like to ask the Minister if there is any plan for the Jurong Stadium that is in existence. My second question is that the new Sports Hub will have a new stadium which is about thesame size as the

present Kallang Stadium. With the present sportsactivities that are happening in Singapore, does he feel that there is a need for an intermediate-sized stadium in Singapore?

The Jurong Sports Stadium is still available during this period. The Member's second question waswhether we should build intermediate-sized facilities. At this point in time, the plan for the Sports Hub would be to have a stadium which would have a seating capacity for about 55,000 spectators. This is actually slightly smaller than the current National Stadium because we have found that the current National Stadium has hardly any event which necessitates 65,000 seats. We will study this issue about whether we need an intermediate-sized stadium, but my initial reaction would be that it is not necessary at this point in time. Each stadium is a significant capital investment and we would rather make sure that we have a sporting calendar which is full and maximally utilises all the facilities available at the regional level before contemplating even more intermediate-sized stadiums, as he has suggested. Nevertheless, it is something which we will certainly bear in mind.

Sir, most of these sports facilities are not beingusedintensively to be commercially viable. Can the Minister explain how he can ensure that the rates of these facilities can be made affordable to an average Singaporean?

Sir, the utilisation of sports facilities is not simply due to the rental rates which are charged. To a large extent, the first pre-requisite is that we create a sporting culture where people will participate in sports on their own free will and decide to use the time

they have available to pursue these activities. So over the next few years, MCYS will certainly focus on promoting a sporting culture.

Having said that, the next issue then is facilities. One of the priorities in the immediate short-term would be to look for ways in which we will work with MOE to open up facilities in schools, including school fields, running tracks, etc, to the local community. If we can work on both promoting sports as a way of life and creating accessible facilities in the neighbourhood, I think we will get a much more vibrant sports scene.

The question of rental rates is also one that is linked to the issue of utilisation because clearly, the more intensively facilities are used, the lower the unit cost and lowerunit costwill alsoenable us to provide more facilities at an affordable rate.

The point I want to make is thatthe starting point will be to promote sports as a way of life. Secondly, to ensure that the facilities are convenient and accessible. And thirdly, run it as cost-efficiently as possible so that the rental rates will be kept at an affordable level, ie, affordable to the people who participate in sports as well as affordable to the Government.

Sir, the size of the new stadium will havea seating capacity of 55,000 and the few stadiums that the Minister has mentioned earlier are very much smaller with a seating capacity of 3,000-4,000.Would the Ministry considerputting some resources to improve the present infrastructure of our neighbourhood and regional stadiums so that at least we bringthem up to a certain reasonable size? Secondly, the gap between the 55,000and 4,000 seating capacity is toowide and I still believe that it is worthwhile to consider an intermediate-sized stadium forthe future.

I thank the Member for his suggestion. We will certainly look at the infrastructure in the current stadiums to see whether some improvements can be made and whetherindeedsome expansion in the spectator stands. I will still have to take his suggestion on an intermediate-sized stadium on a reserve basis and look at the issue. I will not be able to committo it at this point in time. I am sure he will understand that.

Sir,I just wanted the Minister to clarify this point. I am mentioning about the PPP in the Sports Hub itself so as to makesure that the rates are affordable toan average Singaporean. I am heartened to note that the Ministry is working together with MOE to make available more sporting facilities for our residents.I ammentioningthe Hub itself, because of the PPP, and I am concerned about the affordability of itsuse.

The Sports Council will determine the rental pricingpolicy, andthe key determinant there obviously is the question of affordability. So the Ministry will work to ensure that the facilities are affordable. But having said that, we also have to bear in mind that regardless of whether it is being run as a PPP or run as a direct facility of the Sports Council, at the end of the day, someone still has to pay for it. And it is a question of how much the user will payversus how much he wants taxpayers to pay. Our prime focus should be on getting the overall costs down and we can do that best by running things cost-efficiently. In the case of this PPP project, we are hoping that with private sector involvement, they will have an even better handle on cost control.

Order for SecondReading read.

2.22 pm

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

This Bill will amend the Economic Expansion Incentives (Relief from Income Tax) Act, or the EEI Act in short. It will put into effect two tax changes which were announced in the 2004 Budget Statement. It will also make other technical amendments to the Act.

I will now describe each of the proposed amendments in turn. Enterprise Investment Incentive

The Enterprise Investment Incentive or EII in short, was announced in the 2004 Budget Statement. The EII essentially expands the scope of the previous Technopreneur Investment Incentive (or TII in short) to now include all forms of start-ups.

The TII was first introduced in 1999 to promote private equity investments in technopreneurial start-ups at the seed stage. To encourage entrepreneurship in general, the TII, with effect from the announcement on Budget Day, has now been expanded to include start-ups from all sectors and hence, we have renamed it theEII. The eligible investors in start-ups awarded the EII will enjoy tax deductions, against their taxable income, for losses incurred by the investors upon sale of shares in or liquidation of such start-ups which occur during the qualifying period. All prevailing conditions applicable to eligible investors in start-ups who were awarded the TII will similarly apply to eligible investors in start-ups awarded the EII.

Clauses 12, 13 and 15 of the Bill amend Part XIIIC of the EEI Act

(comprising sections 97S to 97Z) to give legislative effect to the EII.

Pioneer Incentive

Let me move on to the Pioneer Incentive. The maximum tax relief period under the Pioneer Incentive will now beextended from 10 years to 15 years. With increasing competition from both developed and developing countries for investments from multi-national companies (MNCs), we need to enhance the tax incentives offered to MNCs in order to encourage them tomake large investments in Singapore. To this end, the maximum duration for the Pioneer Incentive has been extended from 10 to 15 years with effect from Budget Day 2004. This applies to both pioneer industries and pioneer service companies and is in line with our economic strategy of promoting both manufacturing and services as the twin engines of growth.This change is reflected in clauses 4 and 6 of the Bill.

Pioneer industries

The Bill also provides for an amendment to section 4(2) of the Act to remove the mandatory requirements to invite the public to object to the proposed pioneer industry or products, and for the Minister to declare via an order the industries and products that have been granted pioneer status. The amendment is to allow the Government greater flexibility in customising incentives awarded to strategic companies, and hence protect our national competitiveness.Clause 3 relates to this change.

Capital and writing down allowances

Currently, section 10(3) of the Act provides for the deduction of capital allowances on fixed assets to be deferred until the expiry of the pioneer period. The

Bill amends the section to provide for similar treatment for writing down allowances in respect of capital expenditure incurred in acquiring Intellectual Property Rights. This is in line with the Government's efforts to develop Singapore into an Intellectual Property Hub.

In addition, one of the existing conditions for allowing deferment of deduction of capital allowances is that more than 50% of the paid-up capital of the pioneer enterprise must be held by persons permanently resident in Singapore. However, as this preferential tax treatment is increasingly a powerful tool to attract foreign investments, it should also be made available to foreign companies on a case-by-case basis. The amendment to section 10(3)(a) is therefore to allow the Minister the flexibility to specify the minimum percentage of paid-up capital to be held by persons permanently resident in Singapore.These changes are reflected in clause 5 of the Bill.

Enhancement of Development and Expansion Incentive

Sir, currently, the Minister is empowered under section 19K(2) to grant upfront, the Development and Expansion Incentive, or DEI for short, fora tax relief period of not more than 10 years. Further extensions may be considered only towards the end of the first incentive period. The Bill seeks to give the Minister the flexibility to grant upfront extensions of the incentive period to companies, subject to the existing maximum incentive period of 20 years. The intention is to provide investors more certainty of a long-term tax incentive in Singapore and put us on par with other competing locations.Clause 8 relates to this change.

Consequential amendments

Finally, as a result of the various changes to the EEI Act, consequential

amendments will have to be made tosections 3, 66(1) and 70(2)of the Act as well as changes to section 37C(19) of the Income Tax Act. These amendments provide for the following:

a change in the definition of terms relating to the amendment to section 4 (ie, clause 2 of the Bill);

an expansion of the definition of "concessionary income" under the provisions governing investment allowances ( ie, clause 9 of the Bill);

thetreatment of dividends declared by and the requirement imposed on a company which is granted the investment allowance(ie, clauses 10 and 11 of the Bill).

Consequential amendments would also be made to the Income Tax Act arising from changes to the EEI Act. This is to provide for the expansion of scope of the TII to cover start-ups from all sectors and to rename the incentive as the EII.Clause 16 of the Bill amends the relevant section of the Income Tax Act to provide for these changes.

Mr Speaker, Sir, the proposed changes to the Economic Expansion Incentives Act seeks to stimulate more economic activity in Singapore. These changes reflect the Government's commitment to monitor the effectiveness of our tax incentive regime and to keep it relevant and competitive as economic conditions change.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, in speaking on this Bill, allow me to first declare my interest in my private capacity in being an executive of an American MNC which has

substantiallybenefited from pioneer incentives extended by our Government.

I note with interest thatthe EEI Act has been subjected to quite regular amendments since it was first introduced in 1959. The introduction of this Act, and its regular amendments, has undoubtedly beenintegral in enabling Singapore to continually attract foreign investments, which in turn has successfully contributed toeconomic expansion over the last several decades of our existence. I commend the Ministry of Trade and Industry in continually sharpening its pencils to employ economic expansion incentives, among a host of other measures, to attract and nurture high-value adding and value-creating companies to set up base within our shores. As neighbouring and regional countries learn from our success and adopt similar incentives to attract investments, it is imperative that we, as a regional pioneer in the introduction of such incentive schemes, continue to enhance and provide new incentives to facilitate, improve and update existing incentives to continually encourage the inflow of foreign investments into our domestic economy.

Sir, allow me to now deal with some of the changes that are put forth.

First, Sir, I applaud the Minister for the extension of the tax relief period from the current 10 to 15 years for pioneer enterprises or pioneer services establishments. I believe this is probably another world first in extending pioneer incentives up to 15 years for qualifying companies. In the light of us moving more and more intovalue-creation activities, such as biomedical sciences, pharmaceuticals, involving the creation of new drugs, etc, which requires substantial upfront investments in R&D, it is certainly appropriate to extend longer tax relief periods for suchestablishments. This

would provide the incentives for companies to invest in such value-creation activities with heavier upfront, with the comfort in mind that a quicker breakthrough would enable them to recoup their investments sooner, while also enabling them to increase their profits over a longer period of time.

In line with this, Sir, I would also like to suggest to the Minister that a similar extension to the post-pioneer period be considered so as to encourage pioneer companies to expand and upgrade their activities after their pioneer tax relief period. The post-pioneer concessionary tax of not less than 10% should remain, as such companies would have already substantiallybenefited from the zero tax extended to them during the pioneer period.

While it is desirable to continue to attract new leading-edge investments, there is also a corresponding need to further encourage companies which are already here to sink their roots in Singapore further.Sir, while the pioneer incentives have been a powerful tool to attract foreign investments, it is worthy of note that very few home-grown companies have been able to benefit from these incentives. In the light of the present strong entrepreneurship push, we should find creative ways and means to enable our local SMEs to also take advantage of this scheme. Recognising the resource constraints of local companies, one way to enable them to tap on this scheme is to encourage them to team up with smaller foreign SMEs, which may have the expert knowledge and capacity to conduct pioneering and value-creation activities here, but doing away with the hundreds of million or billion dollar investment requirement before they could qualify for long-term pioneer incentives.

In the value-creation niche, it is not necessarily the large amount of money invested but, more often thannot, the brain power and specialised know-how that produce breakthroughs. Incentivising teaming between foreign and our local SMEs would create a win-win situation for both, particularly the latter, as the creative activities would be rooted here. Hence, I urge the Minister to also be generous in extending long-term pioneer incentives to such tie-ups.

Sir, I have a little concern in regard to the repeal and re-enactment of section 4, specifically relating to the part where the Minister is given full discretion to revoke any approval given for any pioneer industry andproduct, without the need for any public consultation. This amendment subsequently removes the obligation of posting such notices in the Government Gazette in repealing section 4. I am concerned that this amendment may go against the Government's overall drive for transparency as this amendment fundamentally precludes any right to a review of the Minister's judgment. Perhaps one consideration is to add a clause to the re-enacted section 4 which would allow a Panel to be set up and review the Minister's decision, say, within a three-month period, should any notice of objection from any party arise. This would enable the Minister to be more accountable for his decisions, consolidate cases so that explanations could be provided, while injecting a sense of transparency in the overall process.

Next, Sir, is the amendment to section 10 in clause 5. While it is laudable that amongst others, the definition of "capital expenditure" in subsection (5) is now extended to cover "expenditure concerning acquisition of Intellectual Property rights", why is it confinedonly for usage in Singapore? Since most, if not all, pioneer companies operate on a global stage, should not the IP rightsbe extended to other countries as well?

Finally, Sir, I am also pleased that the scope of the Technopreneur Investment Incentive is amended and renamed the Enterprise Investment Incentive orthe EII to cover all forms of start-up ventures. This, hopefully, would spur and encourage more Singaporeans to consider entrepreneurship as a career option.

In connection with this, and further to the suggestion that I have made earlier, to pave the way for more local SMEs to tap into the Pioneer Incentive scheme by teaming with foreign SMEs, we should truly encourage more home-grown companies to benefit from the Pioneer Incentive scheme. Anecdotal evidence seems to suggest that most SMEs have the feeling that this particular incentive scheme is covered in a cloak of secrecy and intended only for large MNCs or foreign companies and is not within the scope of incentives that they can tap into. I know this is a misperception, but it is rather unfortunate that such a perception among our local SMEs exists.

Considering the resource constraints of our SMEs to research into such schemes, and also that the EDB which administers this scheme has only a small section on its website which describes this scheme, I would like to suggest that the Ministry consider beefing up the information about the PioneerIncentive scheme, detailing clearly how SMEs and innovative start-ups could take advantage of this scheme. To make entrepreneurship a successful career option in the long run, we must open up as many avenues as need be to create the necessary environment for entrepreneurship to thrive.

In conclusion, Sir, I would like to applaud the Ministry's effort in regularly updating thisimportant piece of legislation to maintain our competitive edge in the light ofthe rapidly changing regional and global landscape.

I wholeheartedly support this Bill.

Mr Speaker, Sir, first I would like to thank Dr Magad for the suggestions in his speech. Let me deal with them, one at a time.

The first one was on the similar extension of the tax relief period to the post-pioneer incentive. I would like to clarify that this incentive has, in fact, been replaced in 1996 by another incentive scheme which was called the Development and Expansion Incentive Scheme or DEI for short. I apologise for the frequent acronyms. The DEI offers a concessionary tax rate of not less than 5%, that is, in fact, better than the one you had recollected, and is for a period of 10 years in the first instance, and the Minister may extend the period further, not exceeding 5 years at a time, up to a total period of 20 years. I thinkhe would agree with me that a pioneer incentive period of up to 15 years plus a DEI incentive of up to 20 years is quite a significant incentive scheme when taken collectively.

The next point I want to touch on is the issue of transparency or secrecy, ashe referred to. I would like to clarify that currently the Minister can already revoke the pioneer status given to industries or products, without the need to invite the public for its views. The current legislation requires opportunities for the public to object for the inclusion of an industry or product onto the pioneer list, but not for its removal from the list. But let me address the issue in this way. These incentives schemes that the EDB works on, are really attempts to incentivise and to bring in strategic industries and companies into Singapore. Members of this House would also realise that in today's day and age, this is a very competitive field, with many countries looking to see what we are doing and, quite frankly, copying it. So there needs to be a correct balance between

transparency of the policy, which I agree with wholeheartedly, and a certain amount of discretion with respect to the implementation of the policy. There are trade secrets and certain tactical advantages which would be ceded by being too open about the companies or the products that we are considering providing these incentives to or, indeed, are negotiating with them in order to invite them to Singapore.

So let me assure the House that we would make sure the process is adhered to, and adhered to in a proper and rigorous manner. But I also appeal for the forbearance of the House that not everything can be completely transparent in this process. But there are clear guidelines for both the award and the revocation of the pioneer status and there would be a due process of communication with the affected companies. We are proposing to remove the need for general public consultation because, as I have said earlier, we need to preservediscreetness in some parts of this process.

Let me move on to the capital and writing down allowances. In the amendment to section 10, the capital expenditure referred to in this section means those that are granted under section 19B of the Income Tax Act and this states "capital expenditure in acquiring any Intellectual Property rights for use in that trade or business". Therefore, when you read it in context, what it really means isfor the use by the company for its business in Singapore, but the actual physical exploitation of that asset may be overseas, just as,for example,ships are given capital allowances but, by definition, in the Singapore context, the ships ply outside Singapore physically.

I move on tohis points on SMEs. Let me say first that I agree wholeheartedly withhim that our SMEs should look for opportunities to tie up with partners, both local as well as overseas, in order to reach the critical mass for them to be able to embark on projects, products and services which would be of value to Singapore at the strategic level. The Pioneer Incentive, in particular, I want to emphasise, is not limited to only foreign MNCs, but is also open to local enterprises, provided they meet the deliverables for the scheme which all applicants are uniformly subject to. On this point, I am sure Members of the House would agree with me that we should be fair to both the local SMEs as well as MNCs whom we are inviting. The criterion is the strategic value of the industry, goods or services which they are producing.

In addition to this, however, we recognise that our local SMEs may have difficulties inreaching the pioneer incentive criteria

and therefore rather than to downgrade the criteria for the Pioneer Incentive Scheme, we have provided a different set of incentives which are more appropriate to the needs of local SMEs. And examples of these include the Local Enterprise Technical Assistance Scheme and the Local Enterprise Finance Scheme, which cater specifically to local SMEs.

Dr Ahmad Magad may wish to note that in the Budget 2004, the Government gave tax exemptions for the first $100,000 taxable income for all companies less than three years old, and this will certainly cover the SMEs and start-up companies in the local context.

That being said, I do agree with Dr Ahmad Magad that we do need to raise the awareness of SMEs with respect to the pioneer incentives and indeed all the other host of incentives and support schemes which we have in place for them so that, ultimately, what we are trying to

create in Singapore is anecosystem of big and small, foreign and local companies, who will be able to make new products, new services and be a vibrant self-sustaining economy.

Sir, a point of clarification for the Minister. In regard to the development expansion incentive, the Minister has just clarified that a company can enjoy a 20-year period of post-pioneer incentive. Is this over and above the 15 yearsof the pioneer incentive scheme?

Yes.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Dr Vivian Balakrishnan].

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

Order for Second Reading read.

2.50 pm

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

The Countervailing and Anti-Dumping Duties Actwas enacted in 1996 to allow for the investigation of subsidies on goods imported into Singapore, as well as the dumping of such goods in Singapore. The Act also allows for the imposition of countervailing or anti-dumping duties to offset such subsidies or dumping. The purpose of the legislation is to empower

Singapore to protect our market against unfair trade practices.

Sir, if a company exports a product at a price lower than the price it normally charges in its own home market, that company is said to be "dumping" the product. There are World Trade Organisation (WTO) rules governing how a WTO member country can or cannot react to dumping. Broadly speaking, the WTO rules allow a government to act, or take anti-dumping action, when there is material injury to the competing domestic industry. The government must be able to show that dumping is indeed taking place, calculate the extent of dumping, and show that dumping is causing injury or threatening to do so. Taking anti-dumping action means charging extra import duty on the imported product in order to bring its price closer to the "normal value" or to remove the injury to domestic industry.

Sir, it is an infrequent occurrence for Singapore to take anti-dumping actions. Our exporters are more likely to suffer from the imposition of such duties by other countries, than to benefit from us taking anti-dumping actions. Hence, in our negotiations on Free Trade Agreements (FTAs), we seek to rule out the application of anti-dumping actions with ourFTA partners, or at least agree to tighten the WTO rules so that it is more difficult for our FTA partner to impose these measures against us.

For example, our FTA with the European Free Trade Association (EFTA) states commits all parties to the non-application of anti-dumping actions vis-a-vis each other. In our FTA with New Zealand, both sides agreed to raise the de minimis threshold for the initiation of anti-dumping actions from 2% to 5% of export price.

The existing Act, which provides for general rules applying to imports from all

countries, needs to be amended to take into account our current and future FTA commitments.

The amendment Bill creates a new section 45A. This gives the Minister for Trade and Industry the power to make regulations to give effect to Singapore's legal obligations under any international agreement.

In the unlikely situation that Singapore might initiate an anti-dumping action against one of our FTA partners, the new section 45A will allow us to enact regulations that modify the application of the Act's provisions to goods from our FTA partners. The new section 45A is not expected to be used frequently, if at all. Even if we have to do so in future, there would be an even slimmer chance of us taking an action againstone of our ownFTA partners with whom we have, after all,preferential trading relations.

Sir,Singapore exporters have been the subject of more than 20 anti-dumping investigations initiated by a variety of countries including India, China, Australia and the United States. To reduce or even eliminate the burdens faced by our businesses when they are subject to anti-dumping investigations, we will continue to push for tighter rules on anti-dumping in our FTA negotiations. The new section 45A will provide the legislative basis to give effect to the tighter rules that we secure.

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.- [Dr Vivian Balakrishnan].

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."

The Income Tax (Amendment) Bill 2004 comprisesfour groups of changes. The first provides for the income tax changes announced in this year's Budget Statement in February 2004. The second group comprises tax changes that form part of the Marriage and Parenthood package, announced in the Prime Minister's National Day Rally Speech in August 2004. Thirdly, the Bill includes legislation that spells out the income tax treatment of limited liability partnerships incorporated or registered in Singapore or overseas. And, finally, it covers other amendments to the Income Tax Act arising from regular reviews to improve our income tax system.

The Income Tax (Amendment) Bill was released for public consultation on two occasions this year. The first consultation was conducted in June. A second consultation, on the income tax treatment for limited liability partnerships, was held from July to August. The draft Bill has been revised to incorporate suggestions from businesses and members of the public.

Tax policy changes from 2004 Budget Statement

Let me first highlight the key tax policy changes that were announced in the 2004 Budget Statement.

Reduction of corporate tax rate

With effect from Year of Assessment 2005, the income tax rate of companies, trustees and non-resident persons will be reduced from 22% to 20%. Three other tax rates which are presently pegged to the company income tax rate are also correspondingly reduced. These are:

the general rate of withholding tax;

the rate of deduction of tax from Singapore franked dividends paid on or after 1st January 2004; and

the rate of tax to be used to compute the maximum effective tax rate for a body of persons.

These changes in tax rates are reflected in the Bill under clauses 24, 32, 36, 37, 38, 40 and 41.

Tax exemption for new companies

As part of Government's efforts to encourage entrepreneurship, the first $100,000 of the normal chargeable income (excluding Singapore dividends) of qualifying new companies will be fully exempt from income tax. This exemption will apply to each of the firstthree Years of Assessment of qualifying companies that fall within Year of Assessment 2005 to Year of Assessment 2009. Clause 32 of the Bill provides for this tax exemption. Where a company does not meet the qualifying conditions, it would still be eligible for partial tax exemption under the existing scheme.

Reduction in rate of tax on royalties to non-residents

To facilitate the use of intellectual property in Singapore, the rate of tax on royalties to non-residents will be reduced from 15% to 10% of the gross amount. This reduced rate will apply for royalties

that are due and payable to non-residents on or after 1st January 2005. This change is covered by clauses 29, 32, 38 and 42 of the Bill.

Enhancement of Approved International Shipping Enterprise Scheme

To retain and attract international ship owners and operators to Singapore, the scope of tax exemption for a company under the Approved International Shipping Enterprise (AISE) Scheme is extended. The exemption will now cover income derived from chartering of ships to residents or permanent establishments in Singapore, as well as charter payments made to non-residents (excluding any permanent establishments in Singapore) by AISEs for the charter of any vessel used for offshore oil and gas activity. The scheme is further enhanced through an expansion of the list of qualifying ships under the scheme to include any vessel used for offshore oil or gas activity. Clauses 5, 9 and 10 provide for these changes.

Tax exemption for foreign-sourced income and domestic-sourced investment income of individuals

Since 1st January 2004, all foreign-sourced income received in Singapore by resident individuals (except those received through a partnership in Singapore) has been exempted from tax. This exemption is intended to facilitate the remittance of offshore funds by resident individuals for investment and management in Singapore.

In addition, specified Singapore-sourced investment income derived on or after 1st January 2004 by individuals from financial instruments has been exempted from tax as well. This does not include investment income from financial instruments derived through a partnership in Singapore or derived as gains or profits from the carrying on of a trade, business

or profession. The exemption for domestic-sourced investment income is granted to ensure that the tax exemption for foreign-sourced income does not bias individuals against investing in Singapore instruments. It also simplifies and aligns our tax treatment of different kinds of investment income. Clause 9 provides for these exemptions.

Marriage and parenthood tax changes

Let me now move on to the second group of tax changes covered by this Bill. These are the various tax measures in the marriage and parenthood package announced during the National Day Rally and elaborated by the Steering Group on Population.

Parenthood tax rebate

First, the Parenthood Tax Rebate replaces the current Special Tax Rebate with effect from the Year of Assessment 2005. The amount of rebate given is $10,000 for the second child and $20,000 each for the third and fourth child. We have also removed the condition that the mother must be below a certain age for parents to enjoy the rebate for their second child, and the 9-year cap to use up the rebate. The Parenthood Tax Rebate will be extended to parents of adopted children. Parents with unexpired Special Tax Rebate (STR) balances in Year of Assessment 2004 will have their balances converted to the Parenthood Tax Rebates. Clause 31 provides for this change and transitional arrangements for taxpayers with unexpired STR balances.

Working mother child relief

Next, the working mother child relief will replace the enhanced child relief and further tax rebate with effect from Year of Assessment 2005. The objective of this tax relief is to encourage more women to

rejoin the workforce after having children. The amount of relief that the mother can claim is 5% of her earned income for her first child, 15% for her second child, 20% for her third child and 25% for her fourth child, capped at a maximum of $25,000 for each child inclusive of other child reliefs. We have removed the condition that the mother must have three GCE 'O' levels or equivalent qualifications to qualify for the working mother child relief, which was a condition for the enhanced child relief. Like the further tax rebate and parenthood tax rebate, the working mother child relief is only claimable by parents of Singapore citizen children. Clause 31 removes the further tax rebate and makes transitional arrangements for taxpayers with existing rebate balances, and clause 55 amends the Fifth Schedule to introduce the working mother child relief.

Grandparent caregiver relief

Third, we will introduce a new grandparent caregiver relief of $3,000 from Year of Assessment 2005 to provide greater support to working mothers whose parents are helping to take care of their children, and also to recognise the important role that grandparents play in bringing up the next generation. This relief is for working mothers with children aged 12 or younger if their parent, parent-in-law, grandparent or grandparent-in-law is not carrying on any trade, business, profession, vocation or employment and is helping to take care of the children. Clause 28(i) introduces this tax relief.

Removal of relief for delivery and hospitalisation expenses for fourth child

We have also removed the relief for delivery and hospitalisation expenses for the fourth child from 1st August 2004 because parents will now be able to use their Medisave for such expenses. Clause 28(b) removes this relief.

Tax changes for limited liability partnership

Let me take this opportunity now to highlight the income tax legislation to provide for the introduction of limited liability partnerships. I shall briefly explain the two key provisions.

General tax treatment of the LLP

A LLP is fundamentally viewed as a partnership notwithstanding that it has legal rights similar to that of a company. Hence, under the Income Tax Act, the partners of an LLP will generally be treated the same way as partners in general partnerships. Specifically, an LLP's profits will not be taxed at the partnership level, but instead each partner will be assessed to tax on his share of LLP profits based on his marginal tax rates. To prevent streaming of disproportionate amounts of capital allowances or losses from the LLP to set-off against a partner's non-LLP incomes, we put a cap on such claims up to the amount of his contributed capital. Any excess will be carried forward to be offset against his LLP income for the following year. Clause 25 adds a new section on the tax treatment of a limited liability partnership.

Duties of liquidator

Currently, the Income Tax Act only specifies that a liquidator of a company being wound up cannot distribute any assets unless the taxes payable by the company have been provided for. With the introduction of the LLP Bill in 2005, it is necessary for the Income Tax Act to be amended to specify the duties of the liquidator with respect to the liquidation of LLPs. In addition to providing for the taxes payable, the liquidator will also be answerable for all matters required under the Income Tax Act in relation to the affairs of the LLP. Clause 44 provides for this amendment.

Other tax policy changes

I shall now deal with other keytax policy changes which require amendments to the Income Tax Act. Our existing tax policies and incentive schemes are reviewed regularly to ensure they remain relevant. Let me highlight two major changes to our incentives and policies that came about as a result of this review process.

Taxing stock options for taxpayers leaving Singapore

Currently, when taxpayers who have been granted stock options in Singapore leave Singapore, they will be subject to the "deemed exercised" rule. Under this rule, they will be taxed on the deemed gain from their unexercised or restricted Employee Stock Options (ESOPs) and unvested or restricted shares from Employee Share Ownership (ESOW) plans at the time of exit from Singapore.

The amendments to the Act, provided by clauses 5, 47 and 49 of the Bill, will now allow employers to alternatively choose to track the individuals, after their exit from Singapore, to determine the actual gains accruing to such individuals at the time they exercise their ESOPs or at the time of lifting of the restriction on shares acquired under ESOPs, or vesting or lifting of restriction on the shares under any ESOW plan. Tax would then be assessed based on the actual gains. The "deemed exercised" rule still remains as an option.

Removal of combined assessment and change to wife relief

Combined assessment is currently the default mode of tax assessment for married couples. Separate assessment was only introduced as an option for married women from 1962. However, separate assessment provides more advantageous tax treatment than

combined assessment in the overwhelming majority of cases. That being the case, clauses 11, 23, 28, 43, 45 and 53 of the Bill will amend the Act to remove combined assessment with effect from Year of Assessment 2005.

To ensure that no one will be worse off after the removal of combined assessment, the Act is also amended to allow husbands or wives to transfer to their spouses any unabsorbed capital allowances, trade losses and donations in spite of the separate assessment. Clauses 2, 7, 8, 22, 26, 27 and 28 provide for these changes.

I shall now briefly outline two key legislative changes related to improving our tax administration.

Inland Revenue Interactive Network

IRAS will be replacing its information system, the Inland Revenue Integrated System (IRIS), with a new system, the Inland Revenue Interactive Network (IRIN). Through IRIN, customer service will be enhanced as electronic services, such as the furnishing of electronic notices, can now be provided to taxpayers via individualised portals. The Income Tax Act will be amended to provide electronic transactions and notices with the same legal force as paper documents. The electronic service of notices will be provided to taxpayers on an "opt in" basis. Clauses 2, 3, 4, 48 and 50 will enable IRIN e-notices to be legally enforceable when IRIN is implemented.

Empower Minister to appoint Deputy Chairmen for Income Tax Board of Review

To increase the efficiency of the Income Tax Board of Review (ITBR), the Income Tax Act will be amended to:

empower the Minister to appoint Deputy Chairmen to the ITBR, who may

preside over hearing committees in the same capacity as the Chairman;

require appellants and IRAS to state reasons for objecting to members of ITBR being part of the hearing committee for specific cases;

clarify that it is the Chairman who may nominate the members to constitute the hearing committee; and

specify that the Chairman may decide on whether to allow a person to proceed with his appeal if the appeal is lodged late.

These changes are covered by clauses 51 and 52 of the Bill.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, it is my understanding that this Bill, as clarified by the Acting Second Minister for Finance, essentially covers the tax changes which were announced and debated in the last Budget Statement debate and also in the Prime Minister's National Day Rally speech. I should not dwell into the key income tax changes as they had been dealt with in past sittings. However, Sir, there are two points with respect to the tax policy changes, which have been introduced in this Bill, which I would like to comment on and, wherever applicable, I would be seeking clarification from the Minister.

The first point concerns the changes to facilitate electronic transactions with the Inland Revenue Authority of Singapore (IRAS) and the second is about the removal of combined assessment. On the first point, I believe the move by the Ministry of Finance to expand its electronic services, which include e-services to taxpayers via individualised portals, represents a laudable effort.

While electronic services are already provided under the IRAS system, which is the IRIS, this Bill paves the way for the introduction of a new system which enhances customer service which among others will include the provision of e-services to taxpayers via individualised portals.

I see this as a positive change as it provides taxpayers with an option to interface directly with the selected departments within IRAS and will also enable the taxpayer to access more advisory information and services than what is currently available. With this amendment, electronic notices sent to a taxpayer will have legal force if the taxpayer agrees to receive such electronic notices. Taxpayers who do not opt for these services will not be subject to the new provisions. This is fair.

In rolling out these enhanced electronic services to our taxpayers, I take it that the Ministry assumes that the majority of Singaporeans will take to the system. May I ask the Minister what is his Ministry's projection of the percentage of taxpayers expected to make use of this new system within a reasonable period of time from its roll-out? This is important because anecdotal evidence suggests that a large number of Internet-savvy users still prefer conventional methods of correspondence and are likely not to embrace this new method of dealing with the tax department feverously.The Income Tax Act currently prohibits prosecution for non-compliance of an electronic notice, unless the notice is served in person or by registered post. I believe that this will remain the case with the new change.

Sir, while I believe that the introduction of e-services is in line with best practices, I am also cognisant of the fact that we cannot force everyone to adopt these new services instantaneously.

Inevitably, the benefits of this introduction will only be realised at a later date. With this in mind, and given the anticipated percentage of users, what would be the expected cost savings to the Ministry? Can I ask the Minister whether any part of these cost savings will be passed on to the participating public in order to entice more to use this system?

Mr Speaker, Sir, in our push to enable more transactions to become less paper-dependent and to maintain the top spot in e-governance, I hope the Ministry has plans in place to inculcate trust in taxpayers to use the system. While I believe those who shun using e-services cut across the various social strata, it is usually those in the lower income bracket that feel discouraged to venture into this new realm of possibilities because of the perceived upfront costs, lack of confidence and also probably lack of incentives. Looking ahead, it could take a generation or two before we could envision a totally paperless system by making e-services the only method of transaction. I hope the Government and the Ministry will craft out a convincing holistic plan to build trust, encourage and persuade more taxpayers to adopt e-services to be offered by IRAS.

Reverting back to my second point about the complete removal of combined assessments, while this makes sense in view of the fact that separate assessment provides a more advantageous tax treatment in comparison to joint assessment, I would like the Minister to clarify whether homemakers, ie, non-working housewives, are still required to fileseparate assessments. If so, there may still be some utility in combined assessments in such cases as it helps to reduce paper work.

Finally, Sir, there is also the introduction of a new section 36A concerning the general tax treatment of the limited liability partnership. Since

there is also a separate Bill on this subject which is due to be read in 2005, I shall take this matter up when this Bill is discussed next year.

On that note, Sir, I support the Bill.

Mr Speaker, Sir, I rise in support of this Bill. This Bill has proposed many changes to the Income Tax Act but I shall be dealing primarily with a couple of amendments dealing with marriage and parenthood.

I strongly support these amendments as they are aimed at providing greater financial support for Singaporeans to raise their children. These are progressive measures and together with other initiatives already announced will help to promote a more conducive environment for couples to have children. The NTUC Women's Committee quite recently conducted a survey among 1,200 union members to seek their views on what measures would encourage them to have more children. More than half of the respondents cited cost of raising children as a key factor in their decision to have smaller families. Hence, financial incentives will help to lessen the financial burden of couples with young children.

Sir, I am particularly happy to support the amendment under clause 55 of the Bill. Clause 55 seeks to remove the enhanced child relief provision and put in its place a new working mother child relief. This relief will now be available to any married woman, divorcee or widow. The current enhanced child relief provision is discriminatory. Only women who have at least three GCE 'O' levels which they must pass at one sitting or higher educational qualifications are eligible for the enhanced child relief. This is elitist and unfair to working women with lower educational qualifications but who also contribute to our economy and our

population growth. I am glad that the new working mother child relief does not stipulate any qualifying educational criteria. This is more equal and fairer to all working women and not only those who are educated. Whilst I agree that tax policies are useful in helping to shape social behaviours and norms, it is nevertheless important that such policies are applied fairly and consistently. Indeed, it makes little sense to use tax policies as a way of encouraging more babies among the better educated who form a smaller number when the situation that we are in requires incentives that will encourage everyone to do their part.

Sir, let me now come to my second point. Clause 28 provides for deductions for grandparent caregivers.

A working mother whose child is being cared for by his or her grandparents will get a grandparent caregiver tax relief of $3,000. This applies to working mothers of Singapore citizen children aged 12 years and below at 1st January 2004. This is a welcome development. The Government currently subsidises every childof working mothers who place their children in the childcare centre. Working mothers whose children are being cared for by their parents or their parents-in-law should not be penalised and deprived of financial incentives from the Government. The current law ignores the contributions of grandparents and gives the impression that institutional care is more superior to the care provided bygrandparents at home.

However, Sir, the present amendment, in my view, does not go far enough. By confining the deduction to only grandparents who are caregivers,it fails to take into account the role played by other caregivers in helping working mothers to take care of their children at home. There are many families where young children are looked after by aunties, cousins or other relatives. There are families with no grandparents as they

have passed away or are overseas. There are also many more working mothers whose children are looked after by non-relatives. And some of these are under CDC-approved schemes, as grandparents are not keen to take on this responsibility because of age, illness, or other reasons.

Sir, under the preamble of the Explanatory Statement to the Bill, it is stated that the objective of the amendment is to provide incentives for marriage and parenthood. If this is the objective, and not strengthening bonds between grandchildren and grandparents, then this deduction should be extended to all situations where a child below 12 is taken care of by any relative or other caregivers. I urge the Minister to give serious consideration to this suggestion, as I believe grandparent incentive is not wide enough and does not take into account the different home-based caregiving arrangements that are practised today but which contribute equally to a working mother's decision whether or not to continue working or to have more children. The way this relief is structured, Sir, and the fact that subsidies are extended only to children placed in childcare centres create an impression that the Government policies favour institutional care of young children, instead of having them cared for at home. Our focus today, Sir, should be on flexibility and providing young mothers with options so that they can decide what is in the best interest of their children.

Sir, secondly, on the same issue, I wish to seek a clarification from the Minister on the implication of the new section 39(p). Sub-paragraph (ii) of the section provides that the deduction will be given if the grandparent caregiver was looking after any of the working mother's children. From a reading of this section, it is unclear whether this deduction will be allowed even for children who are placed in a childcare centre. In other words,if a working mother placesher childina

childcare centre but, at the same time, her childis also taken care of by her grandparents, will the working mother still be entitled to the relief? I hope that the Ministerwill clarify this point, as it is presently unclear.

On this note, Sir, I support the Bill.

Mr Speaker, Sir, I thank the two Members for speaking and for their support of the Bill and the suggestions that they have made. Let meaddress some of the issues that they have raised.

Dr Ahmad Magad raised issues on the electronic service system which will be introduced by IRAS. He asked how would these new electronic services be received by taxpayers. I think one way to benchmark it or have a sense of reference is to look at our e-filing of income tax by individuals. We introduced that in 1998. We had about 7% of the tax base who did e-filing or about 100,000 taxpayers. In 2004, the latest numbers that we have, it is now 68%, or about 970,000 taxpayers. So if you use that as a base andyou look at the reason, I think it is familiarity,they get used to the system, and we have also enhanced to make it more user-friendly. So if you take 68% as the number of people who are now e-filing their tax returns, we can expect a shorter time for them to adopt the other e-services that would be introduced by IRAS.

A related question which is raised by Dr Ahmad Magad was: what about those who, for social reasons, are discouraged or disadvantaged from using the e-services that we are introducing? The IRAS e-services programme is part of the overall Government's e-Government Action Plan. Anda key part of this e-Government Action Plan is the eCitizen Helper programme where we seekto reach out to such people to helpthose who do not own a computer,who do not

understand or are notfamiliar or comfortable with using the Internet. There are 80 locations for theeCitizen Helper programme islandwide, including clubs atour community centres. IRAS itself will start upa "Surf Centre"at its premises to help taxpayers use these e-services.

Dr Magad also asked what are the benefits or cost savings in these e-services. IRAS expects to reap productivity gains of about 20% in the service functions and it will also save costs inprinting, delivery and manpower.Taxpayers would benefit by saving time and effort in filling their forms, or when they interact with IRAS in gettinginformation. The system is really a 24-by-7 system. So if you have a query, you can access it and getany information almost immediately.

Dr Magad also asked for clarification on whether a non-working spouse needs to filea tax return. The answer is "no". Only ifa person has an annual income of above $22,000 wouldhe need to file a tax return.

I turn now to some of the issuesraised by Mdm Halimah. I fully agree with the views and sentiments that she has expressed. On the specific issues that she raised, she asked what about the grandparent caregiver relief. There areother caregivers, why do we not recognise them? The Committee that looked into this issue conducted extensive consultations and feedback. And their assessment and conclusion was that for most families, the grandparents play a critical role in taking care of their grandchildren, and the recommendation then was to recognise this special role played by grandparents, in terms of inter-generational bonding. So the Government had to make a decision and the decision was to do what is practical and

affordable. If we were to broaden this relief, it would dilute its focus. It would increase the cost of this particular reliefand at the same time, it would affect the other measures in the overall parenthood package. So we kept its focus on grandparents to make it meaningful.

Mdm Halimah also asked for clarification on whether this grandparent caregiver relief is mutually exclusive to the infant care or childcare subsidies that a mother is enjoying. The answer is "no". You can claim both. It is in addition to it. You can get the grandparent caregiver relief as well as the infant care or childcare subsidies.

Question put, and agreed to.

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

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

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

Order for Second Reading read.

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

The Bill will amend the Goods and Services Tax Act to give legislative effect to the following measures to:

zero-rate services ancillary to the handling of ships or aircrafts and the handling or storage of goods carried in a ship or aircraft;

introduce a scheme to ease the cash flow burden of exporters in a qualifying industry;

clarify that zero-rating is allowed only where the services are made contractually to, and beneficially for, a person outside Singapore;

facilitate electronic transaction via IRAS's new IT system; and

empower the Minister to appoint the Deputy Chairmen for the GST Board of Review.

Sir, I shall now explain the amendments in the Bill.

Zero-rating of ancillary services for handling of ships, aircrafts and goods carried in a ship or aircraft

Section 21(3)(l) of the GST Act presently allows zero-rating for services provided within the Free Trade Zone or designated area(s) of a port, terminal or airport for the handling of ships or aircrafts and the handling or storage of goods carried in a ship or aircraft. To qualify for zero-rating, these services must be provided within the specified physical boundaries of the Free Trade Zone, port, terminal or airport. Section 21(3) of the GST Act seeks to include services that are integral to the handling of ships or aircrafts and the handling or storage of goods carried in a ship or aircraft even if they are not carried out physically in the Free Trade Zone, port, terminal or airport.

GST scheme to ease cash-flow burden on exporters

Presently, there are a number of schemes that serve to mitigate the cash-flow problems of exporters by waiving GST on imports bound for re-export. However, there is no scheme that relieves GST on local purchases even though they may be destined for export. Exporters that largely make local purchases for subsequent export have to pay GST on the local purchases and only subsequently

obtain a refund of the GST when the items are exported.

For qualifying industries which predominantly engage in supplying products for export with no local consumption, a new scheme will be introduced whereby GST will be waived on specified products supplied from an identified party to another identified party in the qualifying industry. For a start, the scheme shall apply to the supply of marine fuel oil from oil majors or oil traders to bunker suppliers in the bunkering industry. The Act will be amended to effect the scheme.

Zero-rating of services provided for and to overseas persons

Section 21(3)(j) is amended to clarify that for the supply of services to be zero-rated, the services must be made contractually to and beneficially for an overseas person. This amendment, which reinforces the policy intent that only services consumed by overseas persons can be zero-rated, acts as a safeguard against round tripping and tax avoidance.

Facilitating electronic transactions via IRAS's new system

IRAS will be replacing its information system, the Inland Revenue Integrated System (IRIS), with a new system, as I mentioned earlier,the Inland Revenue Interactive Network (IRIN). To enhance customer service, IRIN will enable the provision of e-services to taxpayers via personalised portals (eg, e-notices and e-applications). With the GST Act amendment, electronic transactions and notices will have the same legal force as paper documents.

GST Board of Review

Currently, the Chairman of the GST Board of Review must preside at the

meetings of the GST Board of Review. To allow the efficient processing of cases, section 50 of the GST Act will be amended to allow the Minister the flexibility to appoint Deputy Chairmen to preside over hearing committees in the authority of the Chairman.

Section 51 of the GST Act currently allows the appellant and the Comptroller to object to certain members of the GST Board of Review from hearing the case. To prevent frivolous objections, the Act shall be amended to require the appellant and Comptroller to state reasons for their objections and to enable the Chairman to assess the merits of the reasons provided. Where the Chairman turns down the objection, reasons for the decision would be explained to the appellant and Comptroller. This will enable all members of the Board to be more gainfully deployed for the appeal process.

Similar amendments are being made to the Income Tax Act for the Income Tax Board of Review and Property Tax Act for Valuation Review Board.

Sir, I beg to move.

Question put, and agreed to.

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

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

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

Order for Second Reading read.

Mr Speaker, Sir, I beg to

move, "That the Bill be now read a Second time."

New interest rate regime

In the Budget Statement this year, it was announced that the estate duty processes would be streamlined. Specifically, this amendment seeks to provide a reasonable amount of flexibility. Currently, interest is charged on unpaid estate duty from the date of death. Clause 5 amends section 36 so that for deaths occurring from 1st January 2005, the first six months from death will be interest-free. This gives administrators and executors six months to file a complete estate duty return before interest is charged.

It also provides for a grace period of 30 days after the Notice of Assessment has been issued, after which there will be a penalty for late payment. The changes ensure that those who file and make payment promptly are not unduly penalised. Due to the changes in how interest will be charged, clauses 4, 6 to 9 make consequential amendments to sections 31, 38, and 45 to 47 respectively.

Increase in deduction for funeral expenses

Sir, the next amendment in clause 3 to section 27 increases the maximum deduction for funeral expenses from the current $1,000 or 5% of the ascertained value of the estate, whichever is smaller, to a flat $6,000. This amendment will take effect for deaths occurring after 1st January 2005. The change takes into account the increase in funeral expenses over the years.

Other amendments

Sir, I now briefly outline two other amendments to the Act. Clause 2 amends section 14(7) to reflect that the Technopreneur Home Office Scheme has

been replaced by the Home Office Scheme under the Urban Redevelopment Authority or the Housing and Development Board. Clause 10 amends section 58 so that notices issued under the Act can bear the name of the officer authorised by the Commissioner of Estate Duties under section 4(4).

Sir, I beg to move.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.55 pm.

Sitting accordingly suspended

at 3.34 pm until 3.55 pm.

Sitting resumed at 3.55 pm

Debate resumed.

Questionproposed.

Mr Deputy Speaker, Sir, I rise to express my support for the Estate Duty (Amendment) Bill.

The key changes to this Bill, namely, the increase in funeral deductible expenses from the current $1,000 to $6,000, and the improved interest rate regime, which includes offering incentives for early filing and payment of estate duty, are both favourable changes which benefit the community.I only wished that these changes were made sooner, considering the substantially changed economic environment we are living in today.

However, I have one point to make, ie, whether the current Act has sufficiently addressed the issue of making it attractive enough for foreigners to put in their

money in Singapore in the light of our desire to promote our country as a wealth management hub. To do so, foreigners need to be assured that their investments and properties, specially liquid assets, are easily moveable out of the country to wherever they want to transfer them to, without the fear that this may attract hefty estate duties. I would appreciate it if the Minister of State could clarify whether the Act has sufficiently addressed this.

I know on the whole that Singapore tries to shoot for a reasonably low tax regime, using the OECD nations generally asa benchmark. I applaud this initiative and vigilance, as we need to be competitive and, wherever possible, maintain an advantage in comparisonwith the OECD countries.

I trust the debate on estate duty will continue in the future as we find ways and means to address the issue of competitiveness and make Singapore an attractive place for Singaporeans and foreign talent to live in.

Mr Deputy Speaker, Sir, I rise to support the Bill.

The Bill is a good balance between the interest of the family grieving the loss of their loved ones and the need for speedy collection of the duty owing to the State. Towards this balance, I applaud the amendment provisions, but I do urge for clarity relating to waiver of late payment interests.

First, I applaud the increase in funeral expense deduction to $6,000 and the removal of interests which were previously chargeable on the estate duty during the first six months after the death of the family member. This brings the Act more in line with the current cost of funerals and the timeframe for sorting the estate matters out.

I also applaud the extension of the grace period to six months, although I would be interested to find out how the period of six months is arrived at, whether this is the experience of the average amount of time taken to sort out the filing requirements. The 6-month grace period may sound long, but it is a period that is needed for the grieving family to find an accountant and a lawyer, identify the assets belonging to the estate, even looking for the will, apply for probate or letters of administration, prepare the estate duty returns and file them with the Commissioner of Estate Duty. That is a lot of work to be done during the first six months. Thereafter, after the submission of the estate duty returns, the family and the estate of the deceased would then wait for the Commissioner of Estate Duty's Notice of Assessment to state the amount of estate duty payable to the State.

The Bill tries to strike a similar balance for the payment of estate duty. The estate duty is payable after the family and the estate's receipt of the Commissioner's Notice of Assessment, and the grace period in this case is 30 days. Thereafter, interest is payable on the outstanding duty, if there is any. There is no doubt that the timeframe for payment has to be prescribed and some form of interest or penalty has to be payable after the grace period, to deter any unnecessary delay in the payment. However, the question is where to draw the right balance. Thirtydays appear to be

too short a time ifthe family or the estate has to liquidate some of the assets orestate in order to raise the funds to pay the estate duty. The rapid escalation of interest rate from 6% to a maximum of 12% at 1% per month from the second to the seventh month after the receipt of the Notice of Assessment does appear quite intimidating. This is especially so in view of today's low interest rate environment.

In particular, there is a group and, in fact, there might be a growing group of asset-rich, cash-poor widows and widowers who may live in big houses, but have very poor cashflow. They may need some time to liquidate their home or their property, and forcing them to do so within a very short time would be forcing them into a fire sale, which means a reduction in their nest-egg.

This rapid escalation of interest would also require more computing power. While the Commissioner of Estate Duty may have sufficient computer power to embark on such complex calculations, the ordinary folk may not have the capacity to do so. In contrast, the late payment interest for inheritance tax in the UK fluctuated from between 3-5% per annum from 2000-2004. Hence, I urge the Minister to review (a) whether the aforesaid rapid escalation of interest rate is excessive; and (b) whether the paperwork involved in this complex calculation itself is justified.

Next, I would also urge for clarityon the waiver of late payment interest. I notice that the Bill empowers theCommissionertowaive the late payment interest. This power may mitigate the distress of the need to pay the interest very quickly and to suffer a hefty increase in the interest rate if it should be late. However, the Bill itself is silent on the circumstances in which late interest payment may be waived. Families in grief may be distressed by the lack of clarity on when late payment interest may be waived. For example, some individual members of the grieving family may have to raise funds or even borrow money to pay the estate duty within30 days ofassessment. Would it be wrong that they should be allowed some time to sell off their assets and pay the estate duty out of the funds of theestate and when these are actually insufficient, that the assets of the estate be liquidatedto pay the estate duty? The question is: how much time

would the Commissioner give for such liquidation procedures to be completed, and are the family and the estate expected toliquidate their assets in a fire sale?These are the grey areas where clarity in the law would spare the grieving families further distress.

On this note, I urge the Minister to issue the relevant guidelines as soon as possible so that grieving families and estates of deceased persons may be clear on their responsibilities and liabilities.

Mr Deputy Speaker, Sir, I support the Bill.

Sir, the amount of estate duty collected each year is small. The estate duty, of greatersymbolic than of practical significance of all taxes collected in Singapore,is the least productive of revenue. In both absolute and percentage terms, I believe that its relative importance hasdwindled with the growth of income, goods and services, property and gambling taxes and also the revenue from the ERP system.

In Singapore, the estate duty collected each year is the lowest of all taxes collected. In the last two previous years, for each of those years, the estate duty collected comprised only half or 1% of Singapore's total revenues. When compared to income tax, the estate duty collected by the Government for years 2002 and 2003 comprised only 0.7% of each of those years. I believe that for any one year, two ERP gantries placed at any busy road can collect just as much revenue as those derived from estate duty for that year. This clearly illustrates how low revenue is derived from estate duty.

The pattern of yield from other countries in respect ofdeath taxes is about similar to ours. In the United States, the federal estate tax generally has produced less than 2% of federal tax revenues. In the Irish Republic, the

percentage is about the same. In Canada, the figure has been closer to 1%. The Australian national estate duty has also produced less than 1% of the total national revenue. A similar small percentage has held in Sweden. Even in Great Britain, where estate duties are high, the yield has always been about 3% of the total revenue. I believe that the rate of estate duty in Singapore, despite its relatively high interest rate imposed for late payment by this Bill, is amongst the lowest in the world. As such, I further believe that the economic effect of the estate duty, by nature of its small size, is, to use a word,"unimportant" by the usual criteria. Therefore, I wonder whether the Minister wants to consider scrapping it altogether.

The benefits of not having a death tax in Singapore outweigh those of having one. The oft-given reason for having an estate duty is that it doestend to achieve a more equal distribution of wealth. ButI believe in Singapore, the magnitude of the effect is small. But, on the other hand, if businessmen, not only in the region but around the world, come to know that there is no death tax in Singapore, there is a greater tendency that they may want to keep their money here. The effect is that a tax haven, in respect of estate duty, can be established here. The money and businesses that can be attracted to Singapore shall greatly exceed the $72 million estate duty collected by the Government last year.

In respect of the Bill itself, I would like to comment on clause 3. The amendment to section 27to allow the funeral allowance claim to be increased from $1,000 or 5% of the value of the estate to $6,000 for a person dying on or after 1st January 2005, I think that sum allowed for funeral expenses is still quite unfair. When I was in legal practice, my Chinese clients often complained to me. They said they had spent over $20,000 in

funeral expenses and why only an allowance of $1,000was allowed. I wish to repeat my former clients' complaint to the Minister. It is not fair to cite an arbitrary amount of $6,000. If the Minister really wants to exempt funeral expenses from estate duty, then the wholeamount spent on funeral expenses should be allowed. After all, in mostcases, the money spent on funeral is the deceased's own money in the first place. He should be allowed to lavish on himself for the last time.

The next comment I want to make on the Bill is the grace period for estate duty to be paid without having to pay interest on it. For persons dying on or after 1st January 2005, the grace period is six months, after which an interest, at the rate of 6% per annum, is payable. The rate of interest is 12% per year if the estate duty is not paidwithin 18 months after the date of death.

There are two main reasons why some estates are slow in paying estate duty. Firstly, they are unable to come to a satisfactory valuation of the assets of the estate. Business people, especially people running their own businesses, do not plan their tax liability in the event of death. The executors or administrators find it difficult to locate all their assets and are unable to file the estate duty return withinsix months of death.

Secondly, the problem of liquidity -the inability to raise cash to pay their duty. Often, business people have most of their property in fixed assets which cannot be converted quickly into cash. Some governments do appreciate the problem of liquidity, that is, getting cash with which to pay the taxes. Those governments do not want business concerns with a deceased partner to go into liquidation to raise cash for payment of death duty. They allow the tax to be

paid over a period of years, or allowing various insurance arrangements to make liquidation of a business unnecessary. I do not expect that this Governmentwould be so understanding and sympathetic. My plea to the Minister is to allow an estate a longer period of time to pay up its estate duty free of interest, maybe in 12 months' time, instead of the six months allowed in the Sixth Schedule.

Mr Deputy Speaker, Sir, I did not plan to speak butsince we are on the Estate Duty (Amendment) Bill,I thoughtthatwe should address the principles in debating this Bill.

According to Dr Tony Tan, in his speech to Parliament in March 1984, he mentioned that estate dutyis, in principle, the fairest of all taxes. When a person dies, the State takes it all. But priorto 1984, there were many Members calling for the abolition ofestate duty, including Dr Augustine Tan and Mr Chau Sik Ting. The principle is that the rich men can avoid estate duty, but the burden of estate duty tends to fall on mostly the middle-income group. So, in his Budget Speech in 1984, Dr Tony Tan amended the estate duty rate to the current rate,thereby relieving the burden of the middle-income group. So my question to the Minister is whether the current regime continues to fulfill that objective and whether there is a need to review the wholeestate duty,and whether Mr Chiam's call for scrappingestate dutyis justifiable. Of course, my GPC Chairman, Dr Ahmad Magad, has pointed out that in today's global environment, we might have to review estate duty in view of competition.

I refer to theSouth China Morning Post of21st Julythis year which commented that the long running debate on whether Hong Kong's estate dutyshould be scrapped should be resolved by the next Budget. So within Asia, at least

we have a territory, whichis a competing economy, that might scrap estate duty altogether. That is the principle that I would like to address. I would like to ask the Minister for her reply.

In terms of estate duty collection, I have a clarification to seek. The Straits Times, in November this year, highlighted that with abooming economy and a solid economicrecovery, it swelled the taxman's coffersby $1.3 billion. And it gave a table which showed that estate duty increased from $49 million for the first nine months of the year in 2003 to $339 million for 2004.

My question is:how would a booming economy increase the collection of estate duty? Because, most of the time, estate duty is levied on assets, and assets, I presume, are primarily based on, besidesshares, mostlyassets like real estate and, in the prevailing period, I do not believe real estate has increased that much. So I wonder whether it is more rich men have died during this period or the collection has become more efficient.

On this note, Sir, I support the Bill.

Sir, I wish to thank all four Members -Dr Ahmad Magad, Miss Penny Low, Mr Chiam and Dr Wang -for speaking in support of the amendments, with the exception of perhaps Dr Wang and Mr Chiam. Let me just answer the questions in turn.

First, I would like to thank Dr Ahmad Magad for his comments on the need for Singapore to remain competitive, vis-a-vis the different tax regimes. I would like to state that our estate duty regime should not deter foreigners from putting money in Singapore, as our estate duty rates are currently among the lowest and our exemption limits are among the highest in the world. Our estate duty regime is more attractive than countries such as the UK and Hong Kong. In addition, for foreigners whose permanent residences

are outside Singapore, all the movable assets are not subject to estate duty.

Let me now move on to a few other points that have been raised by Miss Penny Low. She has raised some interesting issues. The first is as regards the choice of the six-month period. This six-month period coincides with the deadline to file. Also, the bulk of the cases are actually cleared well within the six-month period and so it is more than sufficient.

As regards the grace period, the grace period before interest starts to accrue is actually 30 days from the issue of the notice of assessment or 6 months from death, whichever is later. So, the provision is made such that the executor or administrator of the estate has at least 6 months to find means to pay the duty owed. Less than 3% of all deaths result in estates large enough to be dutiable,that is really the incidence, so that there should be no problems in meeting these payments. The man-in-the-street is, therefore, unlikely to face any of these problems.

As regards the escalation of the interest rate penalty, let me just say that this treatment is really not dissimilar from the penalty on the late payment of other taxes like income tax. For example, if income tax is not paid on time, an initial penalty of 5% of the unpaid tax would be added and an additional penalty of 1%would be added for each month of the tax that remains unpaid, up to a maximum of 12%. Computer programmes currently exist to compute the appropriate interest rates.

Let me just add that the imposition of interest rates by IRAS is really that of an enforcer, rather than that of a banker and, therefore, it is not so appropriate to compare it with the current bank or deposit interest rates.

Next, I would like to clarify that the Commissioner of Estate Duty has full prerogative toreduce the interest rates for both late filing and late payment, if he is satisfied that there are reasonable causes for delay. One of the circumstances would be when the executor has difficulty liquidating the assets, which is also a point raised by Mr Chiam.

Finally, let me just go on to Mr Chiam's comment, as well as the point raised by Dr Wang, which is on the principle of it. Although, Sir, this is outside the substance of this Bill, which is premised on the continuation of the estate duty regime, let me just recap the reasons for continuing the imposition of estate duty. There are good reasons to retain estate duty in Singapore as a statement of social equity. A survey of countries shows that it is very common for countries to have some kind of death tax. If it is not estate duty or estate tax, then it takes the form of inheritance tax or gift tax. The few countries which had eliminated death taxes, all have other forms of wealth tax or capital gains. Singapore does not have a capital gains tax. Our choice is, therefore, not to abolish estate duty but to decide if there is a more effective alternative duty we should adopt, like inheritance tax. Sir, it is also important to note that the collection from estate duty may not be very significant when compared to other major revenue sources, only because we target it at the very wealthy estates. Only 2.6% of estates paid estate duty. Nevertheless, the sum collected in dollar terms is not insignificant. It was $75 million in the last financial year, no small change when one is balancing the Budget.

Sir, I am under no obligation to explain how the media report has come about, and I would leave Dr Wang to his decision as to whether he wants to accept the

stories or the arguments that were put forth.

On Mr Chiam's question about the funeral expenses, let me just assure him that the $6,000 is not an arbitrary figure as he has implied. His comment is that the $6,000 level is still low. We have actually done a survey based on data from the Singapore Casket. Let me take the House through some of these. A no-frills funeralwould cost between $1,500-$6,000 which would include a plain casket and cremation. An intermediate funeral would cost between $6,000-$7,000, which would include a wake, casket, embalmment and cremation. An expensive funeral, of course, would cost northwards of $7,000, which would be an expensive casket, elaborate rites at wake, embalming and cremation. So, as to whether we should allow the dead or the deceased person to have his last wish, I could only say it is a dead loss.

Sir, I believe I have answered all the questions.

Sir, I would like to ask the Minister of State whether or not it is fair to get an estimate from the Singapore Casket alone. Actually, she should go to the HDB flats and find out at the funeral wakes how much they spent. They have to give lavish dinners, employ priests, and musicians to come and play. So it costs upwards of $20,000. I have heard this many times.

Sir, I would just want to reiterate that I believe Singapore Casket caters to a large part of the deaths that we have in Singapore,and that these are really fairly reliable numbers which would apply. The rule is not to go overboard in terms of allowing for exemption. It is our belief that $6,000 would be sufficient.

Sowe try to curbfuneral expenses, just like certain

countries had curbed expenses on wedding dinners.

Sir, I think the Government's responsibility is to ensure that a reasonable level is set, and this is a reasonable level.

A clarification, Sir. Is the Minister of State, in her reply, implying that the tables produced by the Straits Times from the IRAS data on the revenue collectedfor the first nine months, were subject to my interpretation? In other words, they are not accurate. And, if they are not accurate, would the IRAS not issue or request theStraits Times to clarify or makeamendments rather than leaving the data in the minds of the public?

Sir, I believe this House does not have to clarify media queries but I would reiterate again that $75 million were collected under estate duty for the last financial year.

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. - [Mrs Lim Hwee Hua].

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

Order for Second Reading read.

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

The Bill will amend the Property Tax Act to give legislative effect to the following measures:

to facilitate electronic transaction via IRAS's new IT system;

to empower the Minister to appoint Deputy Chairmen for the Valuation Review Board; and

to repeal section 8 on the incentive to meet energy conservation standard.

Sir, I shall now explain the amendments in the Bill.

Facilitating electronic transactions via IRAS's new system

As mentioned in the previous two Bills, IRAS will be replacing its information system, Inland Revenue Integrated System (IRIS) with a new system, Inland Revenue Interactive Network (IRIN). To enhance customer service, IRIN will enable the provision of e-services to taxpayers via personalised portals like e-notices and e-applications. As with the Income Tax Act amendment, the Property Tax Act amendment will also provide electronic notices with the same legal force as paper documents. However, Sir, not all taxpayers are net-savvy. To provide safeguards for taxpayers in circumstances where not responding to electronic notices can lead to criminal proceedings, the Property Tax Act will also be amended to require IRAS to serve notices "personally" or by "registered post" before a person can be prosecuted for non-compliance.

Valuation Review Board

Currently, the Minister for Finance is empowered to appoint only one Chairman to preside at the meeting of the Valuation Review Board. To allow the efficient processing of cases, section 26 of the Property Tax Act will be amended to allow the Minister the flexibility to appoint Deputy Chairmen to preside over hearing committees in the authority of the Chairman.

Repeal of section 8

Section 8 of the Property Tax Act was aimed at allowing an owner of a centrally air-conditioned commercial building to get a refund of property tax for approved expenditures to meet the energy conservation standard known as Overall Thermal Transfer Value (OTTV). However, this fiscal incentive has now become obsolete. The OTTV upgrading exercise ended in December 1981 and since then, all new buildings constructed have met the OTTV standards. Therefore, section 8 should be repealed.

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. - [Mrs Lim Hwee Hua].

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

Resolved,

"That Parliament do now adjourn to Wednesday, 24th November, 2004." - [Mr Mah Bow Tan].

Adjourned accordingly at

Half past Four o'clock pm

to Wednesday, 24th November 2004.