Hansard, 2007-01-22

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 (2006/2007) To (2006/2007) Ms Ellen Lee 15 Nov 17 Nov 08 Dec 10 Dec 28 Dec 02 Jan Mr Masagos Zulkifli B M M 15 Nov 17 Nov 07 Dec 08 Dec 16 Dec 25 Dec 16 Jan 20 Jan Mr S Iswaran 19 Nov 23 Nov 15 Dec 27 Dec 16 Jan 19 Jan Mr Tharman Shanmugaratnam 19 Nov 21 Nov 05 Dec 05 Dec 14 Dec 16 Dec 17 Dec 26 Dec Miss Penny Low 22 Nov 29 Nov 21 Jan 03 Feb Mr Teo Ser Luck 22 Nov 25 Nov 04 Dec 09 Dec 11 Dec 15 Dec Dr Vivian Balakrishnan 22 Nov 25 Nov 03 Dec 07 Dec 10 Dec 12 Dec 16 Dec 19 Dec 24 Jan 05 Feb Mr Cedric Foo Chee Keng 23 Nov 24 Nov 07 Dec 08 Dec 15 Dec 21 Dec 21 Jan 25 Jan Mr Lee Yi Shyan 23 Nov 30 Nov 03 Dec 08 Dec 09 Dec 19 Dec 26 Dec 29 Dec Column: 919 Mdm Ho Geok Choo 24 Nov 25 Nov 29 Nov 14 Dec 14 Jan 19 Jan Mrs Lim Hwee Hua 24 Nov 30 Nov 10 Dec 22 Dec 05 Jan 08 Jan 16 Jan 20 Jan Dr Lim Wee Kiak 24 Nov 26 Nov 28 Nov 30 Nov 09 Dec 17 Dec Mr Wee Siew Kim 24 Nov 25 Nov 04 Dec 06 Dec 12 Dec 22 Dec 14 Jan 19 Jan 25 Jan 28 Jan Assoc. Prof. Dr Yaacob Ibrahim 24 Nov 01 Dec 11 Dec 19 Dec 28 Dec 28 Dec 16 Jan 17 Jan Mr Zainul Abidin Rasheed 25 Nov 26 Nov 08 Dec 14 Dec 05 Jan 18 Jan Mr Ong Kian Min 26 Nov 02 Dec 08 Dec 17 Dec Mr Seng Han Thong 26 Nov 01 Dec 15 Dec 17 Dec Mr Ang Mong Seng 27 Nov 29 Nov 06 Dec 08 Dec 12 Dec 18 Dec 13 Jan 16 Jan 18 Jan 21 Jan 31 Jan 05 Feb Mr Michael Palmer 27 Nov 30 Nov 12 Jan 17 Jan Mr Alvin Yeo 28 Nov 09 Dec 16 Jan 19 Jan 02 Feb 04 Feb Mr Chan Soo Sen 28 Nov 04 Dec Dr Balaji Sadasivan 29 Nov 01 Dec 08 Dec 18 Dec 06 Jan 19 Jan 22 Jan 28 Jan Mrs Yu-Foo Yee Shoon 02 Dec 10 Dec 26 Dec 29 Dec 02 Jan 05 Jan Mr Hawazi Daipi 04 Dec 08 Dec 10 Dec 18 Dec Column: 920 Mr Inderjit Singh 04 Dec 15 Dec 24 Jan 02 Feb Mr Charles Chong 05 Dec 11 Dec 22 Dec 02 Jan Ms Jessica Tan Soon Neo 05 Dec 09 Dec 11 Dec 14 Dec 14 Jan 20 Jan RAdm (NS) Lui Tuck Yew 05 Dec 14 Dec Mdm Cynthia Phua 06 Dec 10 Dec 26 Dec 30 Dec 15 Jan 19 Jan 22 Jan 24 Jan Mr Lim Swee Say 06 Dec 10 Dec 25 Dec 29 Dec Mr Yeo Guat Kwang 06 Dec 10 Dec 08 Jan 15 Jan Mdm Halimah Yacob 07 Dec 10 Dec 18 Dec 29 Dec 12 Jan 13 Jan 14 Jan 19 Jan Dr Ong Seh Hong 07 Dec 08 Dec 20 Dec 24 Dec 15 Jan 26 Jan 31 Jan 05 Feb Mr Sam Tan Chin Siong 07 Dec 08 Dec 16 Dec 20 Dec 04 Jan 07 Jan Dr Fatimah Lateef 08 Dec 10 Dec Dr Lily Neo 09 Dec 12 Dec Mr Lim Hng Kiang 09 Dec 12 Dec 10 Jan 12 Jan 24 Jan 26 Jan Dr Ng Eng Hen 09 Dec 16 Dec 31 Jan 05 Feb Assoc. Prof. Ho Peng Kee 10 Dec 19 Dec Mr Gan Kim Yong 12 Dec 16 Dec 22 Dec 24 Dec Mr Sin Boon Ann 12 Dec 24 Dec Mr Raymond Lim Siang Keat 13 Dec 31 Dec 28 Jan 02 Feb 07 Feb 10 Feb Mr Teo Chee Hean 14 Dec 23 Dec 09 Feb 12 Feb Mr Liang Eng Hwa 15 Dec 28 Dec 21 Jan 22 Jan Column: 921 Dr Muhammad Faishal Ibrahim 15 Dec 17 Dec Mr Lee Hsien Loong 16 Dec 27 Dec 12 Jan 15 Jan Assoc. Prof. Koo Tsai Kee 18 Dec 21 Dec 26 Dec 26 Dec Mr Abdullah Tarmugi 19 Dec 20 Dec 14 Jan 19 Jan Mr Mah Bow Tan 23 Dec 23 Dec 27 Dec 31 Dec 01 Jan 03 Jan 23 Jan 27 Jan Ms Lee Bee Wah 26 Dec 26 Dec 25 Jan 28 Jan Dr Lee Boon Yang 26 Dec 29 Dec Mr Zainudin Nordin 27 Dec 30 Dec 21 Jan 26 Jan Mr Matthias Yao Chih 01 Jan 07 Jan Prof. S Jayakumar 06 Jan 09 Jan 12 Jan 13 Jan Dr Ahmad Mohd Magad 07 Jan 09 Jan 16 Jan 19 Jan 03 Feb 08 Feb Mr Goh Chok Tong 08 Jan 16 Jan Mr Khaw Boon Wan 08 Jan 16 Jan 31 Jan 03 Feb Mr Arthur Fong 09 Jan 12 Jan Mr George Yong-Boon Yeo 10 Jan 14 Jan 16 Jan 25 Jan Mr Lee Kuan Yew 16 Jan 20 Jan Mr Seah Kian Peng 16 Jan 21 Jan Ms Grace Fu Hai Yien 17 Jan 18 Jan Mr Heng Chee How 19 Jan 21 Jan 28 Jan 01 Feb Ms Eunice Elizabeth Olsen 23 Jan 02 Feb Mr Gautam Banerjee 23 Jan 26 Jan Prof. Thio Li-ann 23 Jan 26 Jan Dr Lam Pin Min 05 Apr 09 Apr Column: 922 Dr Amy Khor Lean Suan 30 May 02 Jun

ABDULLAH TARMUGI Speaker Parliament of Singapore

I have to inform hon. Members that I have on 15th November 2006 communicated to the President the Address agreed to by Resolution of this Parliament on 14th November 2006.

On 14th November 2006, Parliament resolved in accordance with the Fourth Schedule of the Constitution of the Republic of Singapore that there shall be nominated Members of Parliament (NMPs) during the term of the present Parliament.

The Special Select Committee was constituted on 15th November 2006 and its Report was presented to Parliament on 12th January 2007 as Parl 1 of 2007.

The Special Select Committee nominated the following nine persons to the President for appointment as NMPs:

Mr Gautam Banerjee;

Ms Cham Hui Fong;

Mr Edwin Khew Teck Fook;

Dr Loo Choon Yong;

Assoc. Prof. Kalyani K Mehta;

Ms Eunice Elizabeth Olsen;

Mrs Jessie Phua;

Mr Siew Kum Hong; and

Prof. Thio Li-ann.

On 18th January 2007, President S R Nathan, by Instruments of Appointment dated 18th January 2007, appointed the nine Members as NMPs for a term of two and a half years with effect from 18th January 2007.

The Nominated Members are present today to take their seats. They will now take their oath or affirmation of allegiance.

The following Members took and subscribed the Oath of Allegiance, or made Affirmation of Allegiance, in the order below (in group):

Mr Gautam Banerjee (Nominated Member of Parliament);

Ms Cham Hui Fong (Nominated Member of Parliament);

Mr Edwin Khew Teck Fook (Nominated Member of Parliament);

Dr Loo Choon Yong (Nominated Member of Parliament);

Assoc. Prof. Kalyani K Mehta (Nominated Member of Parliament);

Ms Eunice Elizabeth Olsen (Nominated Member of Parliament);

Mrs Jessie Phua (Nominated Member of Parliament);

Mr Siew Kum Hong (Nominated Member of Parliament); and

Prof. Thio Li-ann (Nominated Member of Parliament).

My congratulations to the new Members! I welcome them to Parliament and look forward to their participation in the proceedings of this House.

1. Mdm Halimah Yacob asked the Minister for Health if he will provide an update to the House on the MediShield and ElderShield reviews and when these reviews will be completed.

Sir, both reviews of MediShield and ElderShield are on-going. I hope to complete the reviews within the next few months so that we can have them implemented this year. There will be many rounds of public consultations during the review so that we can forge the best solutions for Singaporeans.

The basic MediShield reform is more straight-forward. We did one last year which has brought about many benefits.

The industry structure is now sustainable. Cherry-picking has been eliminated. MediShield has regained its financial viability. Patients with large bills have benefited from larger payouts, with co-payment reduced from 60% to 40% of hospital bills. They have saved thousands of dollars.

But 40% is still high for many patients. Preliminary soundings suggest that Singaporeans are prepared to pay higher premiums for greater MediShield payout, provided the premium increase is not too big. Our actuary consultant is helping us in the review.

In addition, we are reviewing the deductible imposed on the private MediShield enhancement policies. The current level of $3,000 may be too high and there is scope to reduce it by $500 or so. We will settle the details within a month or two. This will particularly benefit the middle income group who use the private unsubsidised wards.

As for ElderShield, this is a four-year-old scheme launched in 2002 to provide some basic financial protection for Singaporeans with severe disabilities. It is contractually bound for a review and renewal by September this year. So we will conclude the review within the next few months and be clear on what to do come September.

Our actuary consultant has been on this assignment for a few months now but it is a complicated review. I hope to achieve clarity by next month so that we can discuss more of this in this House.

Sir, supplementary question on MediShield. Could I ask the Minister whether he is concerned about the 30% of Singaporeans who are not covered under MediShield? How does this group of people pay for their high hospital bills as many of them, in fact, belong to the less

well-off group? If the Minister is going to reply that they can apply to Medifund to pay for their bills, then may I ask him how long will the present Medifund last, taking into consideration the increasing life expectancy of the majority and the fast ageing population?

Lastly, may I ask the Minister whether MediShield can only be claimed through hospitalisation as many illnesses can now be treated under day-surgery? Should we not heed to prevent over-consumption incentives in the design of medical insurance?

Sir, I am certainly as concerned as Dr Lily Neo and, rightly so, because if you stay out of insurance thinking that you will never fall very sick, then when you are hit with a major illness, life will be rough on you. As for the 30% uninsured - I thought it was 25% but I cannot remember the figure but it is a significant minority - not necessarily all of them belong to the lower income group. I have looked at some of the data and there are those in the middle-class and many of them are housewives of middle-income families. My message remains the same: please buy insurance for your spouse. Most of them are female who are not working and they look after the family, so as husbands, please look after them and buy them insurance. But a large number are children who are not yet in the workforce. Because they are young, their insurance is actually very low. I remember it is only about $30 a year. Please buy insurance for your children as well. They may be young and fit, but you never know, when something happens and you want to buy insurance, they may be excluded because of pre-existing illness. It is far better to sign them on when they are young and healthy.

I think we have discussed this in this House several months ago. A large number of them are young and below 20

years old. We will eventually catch up with them because once they start working and contribute to CPF, we have a way of reminding them. But it is the spouses whom some husbands may have forgotten, but please sign them on.

As for the adequacy of Medifund, certainly with ageing, the demand will grow and that is why every year, around this time, I will be reminding the Minister for Finance to top up Medifund, if possible. There is an immediate target to double it to $2 billion and I am sure the Minister for Finance will be sympathetic.

Mr Speaker, Sir, after the review, I would like to ask the Minister whether he will give an assurance that MediShield and ElderShield will continue to remain affordable to Singaporeans, in particular, since the Minister has announced that premiums will be reviewed.

My second question is what will be done to assist older and lower-income Singaporeans who do not have enough Medisave savings to take care of their healthcare needs and also to pay for their MediShield premiums.

My third question is to ask the Minister whether he will review the upper limit imposed on Medisave funds because once it reaches a certain amount it will roll over into the Ordinary Account. Will the Ministry be reviewing the upper limit imposed on the Medisave account?

Sir, I can certainly assure the Member that affordability must be one of the key elements in the design of the 3M system because, if it is not affordable, what is the point. It may be a good plan on paper but if most people are excluded, then it does not serve any purpose. That is the reason why in the last MediShield reform, I sought advice

from Members and I remember Mdm Halimah and Dr Neo gave me very good advice that the premium increase should not exceed single digit which limits it to about $10 a month. That is why we designed the last MediShield reform that way. But once you are limited by $10 per month, the payout is also limited and that is why I was not able to bring the co-payment down from 60% to 20% which was the target I set out to do. But, never mind, we achieved quite a good outcome in reducing it to 40% and this year I hope that the public, at least based on the people whom we have spoken to during the focus group discussions, will find it reasonable to have another round of increase of a few dollars a month and, hopefully to bring co-payment down to 20%, if possible. The various computations are actively being done now. I hope this is something that we can achieve and we can discuss this next month.

On the inadequacy of Medisave for the elderly, whenever the budget allows it, we have some top-ups for the elderly. I am looking forward to the Budget Statement next month. Hopefully, there is some good news for us too.

Sir, a supplementary question on ElderShield. But before that, the Minister did not reply to the question on whether MediShield can be claimed without hospitalisation. On ElderShield, may I ask the Minister whether the take-up rate is small and whether he will look into this issue? May I also ask him whether he will look into the tenure and amount of ElderShield payout? Is $300 per month for a totally dependent elderly not too little, even for subsistence?

Lastly, could he also look into the unaffordable premium for ElderShield for the elderly?

I think the limitations of the current ElderShield have

been voiced by Dr Lily Neo and Mdm Halimah and a few MPs before and I have taken note of those criticisms. They are valid and that is why the design of the revised ElderShield will take some time.

Roughly, what I have in mind, which we can discuss more next month is this: obviously the society is not homogeneous and there are people who find $300 per month helpful, but there are also people who find $300 per month too little for the premium they have to pay. Like in the case of MediShield, what I have in mind is to restructure it so that there are various plans and, obviously, they come with different prices, and it is up to Singaporeans to choose which plan they think is reasonable, and then subscribe to it.

As to the acceptance of ElderShield, I am quite glad that the last few times when I looked at the subscription level - because we have a system now, whenever Singaporeans reach the age of 40, a notice will go out to them to encourage them to sign on - those who objected and said, "No, I don't want to sign on.", I think it is down to about 10%. So, in terms of flow, 90% of Singaporeans who reach 40 are signing on to ElderShield. I think that is good and there is a better understanding of the need of such a severe disability plan. But I am quite sure, after reform, if we do a good job of it, many more will find it even more acceptable.

As regards the MediShield for non-hospitalisation or day surgery, I thought it covers.

Medisave covers.

Only Medisave? I have to refresh my memory on this point. Is the Member quite sure that day surgery is not covered by MediShield?

Not for MediShield.

I suppose, like all things, if you want it to cover more, then the premiums have to go up too. So it is one of those things that we always have to find a balance. But the key point is to make sure that at least on hospitalisation, the additional $10 premium increase must be able to cover. If indeed day surgery is not covered then I think the reason must be this: because this is not a routine general health insurance, it is a catastrophic illness insurance, that is, it is for the very sick who requires hospitalisation and typically may require prolonged stay in ICU. So, for day surgery, probably that is why there is no coverage.

Mdm Halimah, last question.

The Minister did not answer my last question. I asked whether he would consider raising the upper limit as currently imposed on Medisave account, instead of allowing it to roll over because there is now more need for funds on the part of the individual.

I am sorry for missing this out. Yes, I am sympathetic on this particular issue. Mdm Halimah has raised it before. I have voiced my support for this. The ultimate decision lies with the Minister for Manpower because CPF comes under him. But I will continue to lobby for raising it. I think it is still academic at this stage because most people have not quite crossed that level. But we will look at the data and see when it is a good time to raise it, provided there is acceptance by the other Cabinet Ministers as well.

2. Dr Lim Wee Kiak asked the Minister

for Health (a) what is the average amount of Medisave a Singaporean has upon reaching the retirement age of 62 years; and (b) following the higher withdrawal limit for Medisave, if there has been a corresponding increase in the utilisation of private paying wards in the restructured hospitals.

Mr Speaker, Sir, as at end-2005, Singaporeans aged between 61 and 65, have an average Medisave balance of $11,700. So it is about $12,000. This can cover about 10 normal episodes of Class B2 hospitalisations.

On 1st April, 2006, we raised the inpatient withdrawal limit for Medisave from $300 to $400 per day of hospitalisation. The purpose is to help Singaporeans cope with their hospitalisation cost, particularly for those who choose to stay in the unsubsidised wards.

Prior to this, Medisave covered, on average, 67% and 52% of the Class B1 and Class A/private hospital bills respectively. After the change, the Medisave coverage has increased to 76% and 57% respectively, reducing the patients’ out-of-pocket expenses. The change has also benefited patients in Class B2/C. They can now use Medisave to pay for more than 95% of their bills. So, it is practically the full amount.

Dr Lim asked if the change has led to more patients in restructured hospitals opting for private wards. The evidence based on five months of data does not support such a view. I am glad that patients have remained prudent in their choice of wards in accordance with what they can afford. This will help conserve their Medisave balances for their future needs.

Mr Speaker, Sir, I would like to ask the

Minister for Health whether the current amount in the Medisave is enough, keeping in mind that we are liberalising and allowing Medisave to be used for more chronic illnesses. So for a person having diabetes at 40 years old now, or hypertension as well, the question is whether there will be enough Medisave by the time he actually retires.

Indeed, I am very concerned about this particular topic because $11,000 or $12,000 is a five-digit figure, but it is not a big number, bearing in mind that you have many years to go. With medical science, life expectancy is growing every decade by a year or two. So, really, people should look at Medisave carefully and try to conserve, and that is the reason I have to be the very unpopular gatekeeper now and then when Members put up their hands and say, "Please, can I use Medisave for this and for that?", I have to always bring them back to the original purpose of Medisave, which is for costly hospitalisation. So when it is for outpatient treatment, a few dollars, or even if it is tens of dollars, please pay for it out of your pocket and conserve the amount in Medisave for the old age, especially at the time when you will not be working. That is why it took us 20 years after we introduced Medisave to decide to make a major change, which is from inpatient to outpatient, but even then to restrict it to 4 chronic illnesses and we have to restrict it carefully. We have started it for four diseases. Implementation so far has been smooth. It is a little bit of leap of faith. If all patients follow, comply with the instructions of their doctors and manage their chronic illnesses while they are still mild, the hope is that we can avoid very costly complications 20 or 30 years down the road. So, on a life-time basis, hopefully, you save money and not just deplete your funds. That is why for the extension of this scheme to other illnesses, we restrict it to those where

there are clear-cut disease management protocols and not just for any kind of outpatient treatment. Because if it is purely consumption without any impact on the future health, then I think we should not do so.

One last supplementary question. Since the Medisave is mainly used for hospitalisation as well as more serious disease, the question is, for the poor, they cannot really afford the amount of money to use for health screening. Will the Ministry consider in the future or near future to allow Medisave to be used for health screening, especially for the poorer population so that they can detect their disease at an early stage to avoid costly treatment later on?

Health screening is a most interesting topic. It covers a wide field. There are a lot of self-interested parties with personal interest at play when they push for certain kinds of screening. For one, some of those esoteric health screenings cost hundreds, if not thousands, of dollars to pick up things which often the patient would die before that thing kills him. That means he dies of something else and not because of that. Because the scanning technology is now so advanced, you can pick up all sorts of things. Nobody is perfect and we have all kinds of problems with us in the body but we may not die of those things, but die of something else. But if you pick it up, and the US begins to coin a term called "pre-disease", you are in fact healthy people, but if you are pre-diseased, you are pre-diabetes, you are pre-whatever, it merely caused you so much anxiety and, of course, along the way some of the hospitals may come in to say, "Do this, do that." And because in the US, they allow advertising of prescription drugs, you are just making the population hypochrondriac. And when they go to the doctor, they ask, "Please

prescribe this, please prescribe that.", and the money just run out but, at the same time, their health does not improve.

So, for screening, please take it with, shall I say, "a pinch of salt". All I know is some of the most effective health screenings which really make sense, which really prolong life and improve health are rather inexpensive, which is, what is your blood pressure, your cholesterol level, and those basic tests are really very cheap which most people can afford. If you cannot afford it, as MPs, as organised by Dr Lily Neo for many years, we do it on a community level and we can help subsidise them. But for those esoteric $600 or $700 type of screening, if you feel that it will benefit you, please pay for it yourself and do not look to me for subsidy or for Medisave to be used.

3. Ms Ellen Lee asked the Minister for National Development (a) whether a 30% subsidy is in fact true of all HDB flats bought direct from the HDB; and (b) how does the HDB explain the magnitude of the loss in value to some first-time buyers of new flats which had a purchase price of $320,000 to $350,000 in 1996-1998 but which value had dropped to $290,000 to $320,000 since 2004.

All new HDB flats are sold at a subsidised price, below the market value. The extent of subsidy varies with flat-type and market conditions. It is not a fixed percentage.

HDB flat prices are subjected to market forces. They move up or down depending on demand and supply factors similar to private properties. It is possible

therefore for the prices of HDB flats to fall below their purchase price even with a subsidy. This was what happened when the property market suffered a severe downturn after the Asian Financial Crisis. Without the subsidy, the diminution in value would have been even greater.

4. Mr Zaqy Mohamad asked the Minister for National Development (a) will the Ministry review the limits on the maximum income for the purchase of subsidised flats from the HDB; and (b) whether, in the HDB’s measure of affordability, it takes into account families which have illnesses to bear or aged parents to support, whether living with them or not.

The household income ceiling for the purchase of a subsidised flat by first-time flat buyers is $8,000 per month. For extended families buying a subsidised HDB flat to stay together, they will enjoy a higher household income ceiling of $12,000 per month.

The income ceiling is necessary to ensure that the Government’s limited public housing subsidies are given to those who need them more. It is already generous, as eight out of 10 Singaporean households will satisfy this income ceiling.

Families whose household income exceeds the income ceiling can buy resale HDB flats. Those with monthly household income of up to $10,000 can buy a new Executive Condominium (EC) unit with an EC Housing Grant.

Nonetheless, we recognise that there may be cases deserving special consideration. For example, the household income may exceed the income ceiling only marginally. Or although the household income exceeds the income ceiling, the family is in financial difficulty due to prolonged costly medical treatment needed by a family member. As it will not be possible for HDB to set a meaningful income ceiling that covers all extenuating circumstances, HDB exercises flexibility on a case-by-case basis to allow deserving cases to purchase a subsidised HDB flat.

5. Dr Teo Ho Pin asked the Deputy Prime Minister and Minister for Home Affairs if he will update the House on counter-terrorism measures taken by the authorities on vehicles transporting hazardous materials on our roads.

(for the Deputy Prime Minister and Minister for Home Affairs): Sir, the threat of terrorists using hazardous material (hazmat), such as flammable materials or hazardous chemicals, for terror attacks is real. For example, on 11th April 2002, terrorists drove a truck carrying liquefied natural gas and ignited the cargo in front of a synagogue in the Tunisian island of Djerba, killing 21 and injuring 30 tourists. Currently the use, manufacture, storage and trade of hazmat are regulated by agencies such as the Singapore Civil Defence Force (SCDF) and the National Environment Agency (NEA). Companies and individuals must adhere to safety and security standards stipulated by these agencies. In addition to safeguarding the hazmat while it is in situ, ie, during storage, the protection of hazmat has been extended to its transportation to minimise the possibility of its being used as a moving terrorist weapon.

A number of measures have been implemented to regulate the transportation of hazmat in Singapore. Let me set these out:

First, hazmat vehicle drivers must pass security screening and a one-day emergency response course conducted by accredited institutes before they are issued with a Hazmat Transport Driver Permit (HTDP) by SCDF.

Second, vehicles must either be licensed by either SCDF or NEA before they can be used to transport flammable materials or hazardous substances respectively.

Third, foreign-registered vehicles transporting hazmat are checked at Tuas Checkpoint before they are allowed entry into Singapore.

Fourth, hazmat drivers are required to adhere to regulated routes and transportation timings.

Fifth, to further minimise the possibility of a terror attack using a hazmat vehicle within the Central Business District (CBD), vehicles that need to travel into the CBD are only allowed to enter through three designated entry points at Anson Road, Lavender Street and Newton Circus where they are checked.

Sir, in addition, the GPS-based Hazmat Transport Vehicle Tracking System (HTVTS) was implemented on 1st July 2005 to track the movement and location of all local and foreign-registered hazmat vehicles transporting bulk quantities of licensable toxic or flammable materials to prevent the possibility of terror attacks using hazmat vehicles as weapons of mass destruction.

These vehicles are monitored on a real-time basis round-the-clock by SCDF's Control Room to ensure that drivers

comply with the prescribed requirements. Any violation such as deviation from approved routes would trigger an alarm at SCDF's monitoring console. At the same time, the horn and hazard warning lights of the errant vehicle will be activated. When the alarm is activated, the Hazmat Transport Vehicle Tracking System (HTVTS) operators will verify with the company involved to ascertain the nature of the violations, eg, transportation of hazardous cargoes outside of the regulated transportation routes or hours without prior approval from SCDF. If a violation is unable to be verified through the company concerned, the operators will activate SCDF's Enforcement Bikers and Police's Fast Response Cars, if necessary, to intercept the errant vehicle.

Currently, whilst the tracking system can detect an errant hazmat vehicle, it cannot immobilise the vehicle to prevent a determined terrorist from driving it into a target. We now have plans to roll out the progressive installation of immobilisers on these hazmat vehicles that would enable SCDF to remotely activate them to stop the vehicles by shutting down the engine safely. We will implement this plan over a one-year period, starting from April this year.

Sir, may I ask the Minister whether the present water tank trucks which actually carry potable water for watering plants will be classified under hazmat vehicles because these vehicles can be easily stolen and refuelled with hazardous materials and pose as a security threat?

Currently, about 680 vehicles are licensed and these are vehicles of three metric tons or more, because they carry hazardous materials like chlorine and flammable materials like acetylene or butane. These are the ones that are the target and focus of this regulation, not water-carrying trucks.

6. Dr Fatimah Lateef asked the Deputy Prime Minister and Minister for Home Affairs if he will give an update on Subutex abuse since Subutex’s classification as a controlled drug was implemented in August 2006.

Sir, buprenorphine (which is the active ingredient in Subutex) was made a Class A controlled drug under the Misuse of Drugs Act on 14th August 2006. Between 14th August 2006 and 31st December last year, CNB arrested a total of 347 persons for Subutex-related offences. Of these, 150 Subutex abusers were sent to the Drug Rehabilitation Centre (DRC) for treatment, 55 abusers were imprisoned under the Long Term Imprisonment regime, and 102 persons were sent to Prisons as they were found to have either trafficked or possessed the drug. As for the remaining 40 persons, 22 were given a warning and 18 are pending further investigations.

Since the implementation of tougher measures to counter Subutex abuse, I am happy to report that the situation has improved significantly. To prevent the influx of illicit supply of the drug, CNB is maintaining a watchful eye at the checkpoints as well as on the ground situation. CNB has not detected any signs of a black market emerging and the number of Subutex tablets seized monthly is not high. Between 14th August 2006 and 31st August 2006, 512 Subutex tablets were seized. Although about 1,000 Subutex tablets were seized in September 2006, this is attributed to a single seizure of 884 Subutex tablets, which is the largest consignment seized so far. 319 tablets and 590 tablets were seized in October and November last year

respectively. In December 2006, only 79 tablets were seized.

Feedback from the public also suggests that the Subutex abuse situation has improved. I am sure Members of Parliament who monitor the grounds will know this. Since September 2006, the monthly number of calls and other feedback from the public on Subutex abuse have declined. We believe that CNB's strong enforcement action has led to a decline in public concern over Subutex abuse.

CNB's intelligence indicates that, while it is likely that a small proportion of Subutex abusers may attempt to illicitly access the drug, the vast majority of ex-Subutex abusers have very likely managed to overcome their Subutex dependence. Thus, CNB's enforcement actions have helped to contain Subutex abuse. Nevertheless, CNB will continue to keep a close watch on the Subutex abuse situation and will press on with vigorous enforcement efforts to detect and deter illicit drug activities, taking firm action against both drug traffickers and abusers alike.

Sir, since August 2006, based on the information released by the Central Narcotics Bureau on its website, it appears that there have been several operations in which significant amounts of heroin had been seized. And I would like to ask the Senior Minister of State whether he thinks it is possible that there has been a displacement effect from Subutex now that it is controlled and such abusers switching instead to heroin.

Sir, as I have reported, our assessment is that there has been no displacement effect. Firstly, the number of heroin abusers who have been arrested has remained low. Yes, there was some increase in 2006 over 2005, but not significant in terms of

the numbers. So that is the key point. Otherwise, you will find the vast number of Subutex abusers on the CARDS system, more than 3,000, if the supply of Subutex is hard to come by, then they would have gone for heroin. But despite vigorous enforcement action, and this is something that CNB has not compromised on just to have nice figures, the number of heroin abusers arrested has not shot up dramatically. The price of heroin on the ground has also remained constant because if the demand is high, the price will go up. These are figures which CNB will monitor very carefully. As for seizure of drugs, I think the number can go up and go down. I think there will be those who may try to bring drugs into Singapore of whatever volume and the bringing of drugs and the seizure of drugs in themselves do not suggest the deterioration of the ground situation.

Sir, can I just find out the utilisation rate for the Subutex voluntary rehabilitation programme and the take-up rate since it has been implemented and, also, if the Minister has the data for the ratio breakdown?

About 3,000 persons signed up for the Subutex programme. Of these, about 2,500 turned up for the first consultation, and about 1,600 completed the medical detoxification phase. So not all have signed up. But I think what is heartening is that of the number of Subutex abusers who were arrested, not more than 170 were people who had gone for the SVRP programme. In other words, a large majority who went and completed it were not arrested subsequently for Subutex abuse. So that is heartening.

I wanted to ask the Senior Minister of State what is the success rate of the rehabilitation programme because there have been

newspaper reports that there have been drop outs of this Subutex rehabilitation programme.

I think we can only go on the figures of the arrestees, the number of Subutex abusers who have been arrested, since we began the programme in August 2006. As I said in my main answer, only about 350 persons have been arrested for Subutex-related offences over the past four or five months. So that signals that when Subutex was legal, people went for it because it was legal and it was accessible. But when the message was sent that Subutex would be illegal and that you should kick whatever habit you may have, whether it is heroin or other related drugs, in a way we have always said should be done, which is zero tolerance, I think the message went to the ground. So that is the current situation.

Sir, why was Subutex not classified as a controlled drug earlier? Why wait until there was widespread abuse, then the Government decided to take action? Secondly, I wonder whether it is a wise decision for the Government in the first place to allow Subutex to be used legally in a way to counter the impact of heroin drugs.

I think this point has been answered before, principally by the Minister for Health whose officers are in charge of bringing drugs into Singapore as prescription drugs. This was done in 2002. I think the officers at that time felt that this could be part of the overall scheme to help heroin abusers kick the habit. And, indeed, when it was introduced in Singapore, already six countries had it. So it was done. To the credit of the Government, we did not just do it and leave things as they are because we monitored the ground. When CNB fed

back to MHA that there was abuse on the ground, steps were taken to try to arrest the situation, not immediately by making it a controlled drug but by various measures taken. For example, the CARDS system was started whereby all abusers of Subutex were required to register and this online registry was made available to doctors so that they would know if the abusers doctor-hop. A protocol was started, clinical practice guidelines where doctors were taught and informed, workshops were conducted to tell them what is the proper way to administer Subutex. When these measures were implemented and still did not stem the tide, we felt that we should do more and in a sense reversed the decision and hence we made Subutex a controlled drug.

I would like to go back to the question earlier whether heroin was a substitute for Subutex. If we look at the trend the other way around where Subutex became a substitute for heroin, does the Ministry see any other substitutes? I do not think that they would go to a more expensive substitute but to a cheaper alternative. Do we see a trend with substitute drugs, apart from Subutex, now that we have clamped down on Subutex?

We do not want to use a drug-substitution approach. This episode shows us that that is not the approach to take. We are, of course, monitoring other drugs. For example, Dormicum is one drug we are monitoring. But unlike Subutex, Dormicum has also other medical uses. It is used for pre-surgery anaesthesia. It can be used to help people who cannot sleep. So, we do not want to just always make a drug a controlled drug when it is abused. The best way is to monitor, work within the framework and make it controlled, if need be.

Just one other point on my previous answer. The Minister for Health is on record saying that it was a matter of poor judgement on the part of the Ministry of Health for having introduced Subutex. So it is already very widely explained in the media. There is nothing to hide. But to give the Government credit, when we realised that it should not have been done in the first place, we took remedial actions clearly, decisively and, most importantly, as a Government, multi-agencies working together.

7. Mdm Ho Geok Choo asked the Minister for Manpower (a) how will a 3% increase in CPF contributions impact the business competitiveness of Singapore; and (b) if the fruits of Singapore’s economic growth can be passed on to workers through their variable wage component instead of raising the employer’s CPF contribution.

Mr Speaker, Sir, the NTUC proposed the CPF increase. The Government is still consulting various stakeholders, including unionists, employers, workers and other relevant agencies on the proposed CPF increase. It would be premature to speculate on the actual increase, if any, but we agree with Mdm Ho that the impact on our overall business competitiveness should also be a factor for consideration.

Mdm Ho also asked if we should increase workers’ variable wage component instead of the employer's CPF contribution. CPF increases and rewarding workers through a higher variable wage component are not mutually exclusive options. It does not need to be "either or". You can do both. Our view is that,

if the economy continues to do well, an increase in employer CPF rates may be appropriate, as a structural change to benefit all workers.

Mr Speaker, Sir, I would like to ask what is the Ministry's view with the following observation. Where economists have warned of divergent growth patterns between different businesses and income groups and that a dual economy may emerge, with businesses catering to the global market seeing robust growth whilst, on the other hand, companies serving local markets are lagging behind because private consumption growth is slow. I would like to ask how and how else can the Government help equalise this disparity for businesses and incomes.

Mr Speaker, Sir, I thank Mdm Ho for her question. She is asking for two sets of situations. One set is for workers. In fact, she is quite right. The low-wage workers, if we increase the CPF for them, they would be more costly to employ and they might find problems in employability. If we increase, for example, the employees' CPF, obviously they will have less in take-home pay. I think that is why there is merit in NTUC's suggestion that, for this group of workers, we actually reduce both, and that is something we are seriously considering, ie, reduce the employees' CPF so that their take-home pay is increased, and reduce the employer's CPF so that they cost less to hire.

Of course, then something has to be done if we did do that to match the reduction in CPF, and this is where Workfare comes in and this is an active area that we are consulting various agencies. For various companies, Mdm Ho is saying, "Yes, some companies are doing well and there is a global demand for my goods, but certain companies that are looking at domestic demand may not be doing very well." And we agree that

the CPF is a blunt tool. Even when we reduced it, there were companies that were doing well post-SARS. We recognise and, therefore, it is important to consider two general points.

One, that we should do it only when the economic forecast is sustained and projections are good. Two, the actual increase, if any, should be able to allow a majority of companies to respond to it, as well as to look at other budget measures which may be helpful to these companies which are usually the SMEs.

8. Mdm Halimah Yacob asked the Minister for Manpower, considering that only four in ten Singaporeans had the mandatory Minimum Sum savings in their CPF accounts in 2005 and a survey result released in February 2006 showed that only one in ten actively saved for retirement, what more can be done to help enhance Singaporeans’ retirement security.

Sir, about four in ten active CPF members who turned 55 in 2005 met the Minimum Sum of $90,000.

One reason for this is that members were and are able to withdraw 50% of their CPF balances when they turn 55, before they set aside the Minimum Sum. In other words, previously we said, "Even if you did not, you could withdraw an amount of your CPF." If we had not allowed that, 60% of active members would have met this Minimum Sum.

This is the reason why the Government had announced in 2003 that the Minimum Sum should be gradually increased, and the 50% withdrawal rule will be progressively phased out starting from 2009. These changes will help

Singaporeans to set aside more funds for their retirement.

Besides changing the withdrawal rules, the Government will help Singaporeans to enhance their retirement security in a number of other ways.

Firstly, the Government will help older Singaporeans keep their jobs and stay longer in their jobs so that they can earn more and put more into their CPF.

Secondly, we will find ways to help CPF members enhance the returns on their CPF savings. In February this year, the CPF Board has tightened the criteria for admitting funds into the CPF Investment Scheme (CPFIS) in order to improve the quality of funds in CPFIS. In other words, we set out a number of criteria, both on expense ratios and fund loading charges as well as how they perform. So, we are using two levers. One is information, ie, to put out the information on how the funds perform. We rank them in terms of their expense ratios, as well as set benchmarks for how much they can charge.

Finally, the CPF Board will continue to educate CPF members on ways to improve their retirement adequacy. We are working with market players to provide members with better information about their investments, educating members so that they can make informed investment decisions, providing online financial tools and reaching out to Singaporeans through seminars and road shows on the need for retirement funding. The most recent road show at the HDB Hub in September 2006 attracted 92,000 visitors. So Singaporeans are actively engaged, and I take it that they want to learn also how to plan their retirement. We will also work with the Housing and Development Board to encourage the prudent use by members of CPF for housing.

Sir, I would like, firstly, to ask the Minister whether, in the Minister's view, the Minimum Sum that members can withdraw after 62 is sufficient to take care of their retirement needs. Secondly, the Minister alluded to the fact that there is a study that is going on to look into how to enhance the returns to members' CPF contributions. When will that study be completed and its recommendations made and put in place? Thirdly, are there any proposals to look into how to help Singaporeans make use of their flats or assets to convert them into cash to make use of them for their retirement income?

Sir, I thank Mdm Halimah for bringing up those salient questions, which give us the opportunity to touch on them.

The Minimum Sum, as it is called, is the minimum sum, ie, minimum enough for substantial living and let me translate it into monetary terms. If we assume a 20-year lifespan from age 62, the average life expectancy now at age 62 for males is 81 and that for females is 84. For females, 84 minus 62 is 22 years. If we translate so many in dollar terms, ie, about $90,000 over 20 years, we get the amount. That is the amount that we think is adequate for subsistence living. That is why it is called the Minimum Sum.

The second point which Mdm Halimah asked is whether we are considering a variety of plans to enhance the retirement savings for members and when the study would be completed. Sir, the study is on-going. But even as we are looking at various aspects, we have moved. Some of the changes the CPF Board has made in terms of tightening entry of funds and dictating maximum expense ratios were as a result of this study. There was a proposal put that the CPF Board should consider itself as an aggregating body to put out funds. That is a little bit more complex and it has taken us a while. We

are still consulting various stakeholders. The issues are risk-tolerance and educating members, which the industry tells us is not that easy. No matter how much we educate members, some do make wrong decisions in investments. In any framework where we liberalise the investment framework, members must be willing to live with that risk.

There was a third point, on the monetisation of assets. As the Prime Minister mentioned, the majority of Singaporeans have assets. Even the lowest 20% of households have a positive equity of $138,000. This is a significant asset that we can help them monetise and have an income stream. It is an added revenue for their retirement. I think the Minister for National Development is actively studying these options in terms of how we can provide options that allow our elderly to monetise.

Mr Speaker, Sir, could I ask the Minister what is the total amount of members' balances in the CPF presently? How are members' funds being invested and what are the returns of such investments? How are the CPF rates of return being protected against the current rates of inflation? Can there be better returns to members, especially during retirement, to address the issues of longevity and inflation risks? Lastly, could the Minister look into the CPFIS scheme, ie, the early withdrawal scheme, to see whether such funds should be centrally managed, instead of leaving them to individual choice, for better return outcomes for members?

Sir, as I mentioned, these are active suggestions that we are looking into. But we cannot run away from one cardinal principle on investing, ie, higher returns come with greater risks. So, if a member wants to put in his funds which may have a projected higher return, he has to live with the fact that he may also lose money in the short term. That is

why the current framework, which pays 4% for the SA and the MA accounts, is risk-free, the Government bears the risks. Members, if they want to, for example, could invest in the CPFIS. Unfortunately, as our results show, about three-quarters of them do not make good investment decisions and fail to outperform CPF's interest rates.

Mdm Lily Neo asked whether we should invest on behalf of members. That is a good suggestion. It allows us to aggregate the sums and reduce the expense ratio. But the problem we are still grappling with is one of investment risk. Even though I may do it cheaper for you, ie, at a lower amount, if the stocks go down and there is a loss of money, there is a risk that we will have to factor in. So, we are looking at all these issues. Currently, at the 4% interest risk-free rate on SA and MA, I think it is quite reasonable, given the current conditions of the market.

Mr Speaker, Sir, the Supplementary Retirement Scheme (SRS) has been indeed one of the vehicles used to enhance Singaporeans' retirement security. May I ask the Minister to please explain why the maximum contribution cap on the SRS declines each year instead of going the other way round?

Sir, that is a very good question best answered by the Minister for Finance.

9. Ms Lee Bee Wah asked the Minister for Trade and Industry in view of the large investments involved in, and the high profile of, the two Integrated Resorts (a) if mechanisms have been put in place to monitor the work-in-progress to ensure

compliance with the contract awarded; (b) if he will provide an update on the work-in-progress with regard to these two projects; and (c) what recourse is there if the companies fail to meet their contractual obligations, such as completion deadlines.

Sir, the obligations of the Integrated Resort (IR) operators are clearly outlined in the Requests for Proposals and the Development Agreements. The two IR operators are contractually bound to deliver the overall IR concept and all the components of the IR as detailed in the accepted proposal. Any changes to the accepted proposal would require the Government's approval.

Furthermore, the IR operators must start construction within three years and complete the construction within eight years from the date of the signing of the Development Agreement. They also have to incur 100% of the development investment within three years from the first issuance of the casino licence, or eight years from the date of signing the Development Agreement, whichever is earlier.

If the IR operators fail to meet their contractual obligations, the Government reserves the right to forfeit the security deposit, which is 5% of the development investment, or about $200 million for each IR. If necessary, the Government can also repossess the IR land.

Let me assure Members that while we have put in place robust safeguards, the IR operators themselves have every incentive to complete their projects on time and on budget. The two IRs have an exclusivity period of only 10 years, and every month of delay translates to not just substantial revenues forgone, but also interest costs incurred for the IR

operators. The cost of delay will thus be high especially given the large investments involved.

The Government will continue to closely engage with the two IR operators to ensure the successful implementation of the IRs.

Sir, now that Singapore has awarded one of its biggest projects on Sentosa to a Malaysian company, can the Minister please inform the House whether he expects that Singapore companies will find themselves more welcome when they invest in Malaysia, especially the south Johore economic zone?

Sir, we awarded the IR to the Malaysian company entirely on the merits of their proposal. And we hope that our neighbours - Malaysia, Indonesia, whichever country - will welcome Singapore investors on the merits of their investment proposals. I think this is the best way for an enduring and sustaining relationship. Of course, with more economic contacts with our companies, the economic linkages and the people-and-people linkages will help facilitate relationship between us and our neighbours.

10. Mdm Ho Geok Choo asked the Minister for Trade and Industry (a) what is the increase in the number of small and medium enterprises (SMEs) in the last five years and which industries do they belong to; (b) what contributions do they make to the Singapore economy; and (c) what are some of the more pressing needs of these SMEs and how are they being helped.

Sir, between 2000 and 2004, the number of small and medium enterprises (or SMEs) increased by about 13,000. Today, we have some 133,000 SMEs in Singapore, which make

up 99% of all our enterprises. About 94% of our SMEs belong to the service and commerce industries, with the remaining 6% in manufacturing . SMEs contribute some 42% of our GDP and employ 56% of our workforce.

Capability upgrading

The Member asked about the pressing needs of our SMEs and what we are doing to help them. A key concern facing our SMEs is the increase in global competition, especially from lower-cost competitors offering higher value-added activities. In this respect, we have various programmes, at both the industry and the enterprise level, to help our SMEs upgrade their capabilities and move up the value-chain.

At the industry level, we have the Local Enterprise and Association Development, or LEAD programme, which supports industry development efforts by able and willing industry associations. At the enterprise level, we have introduced the Capability Development Programme, which covers areas such as process improvement, strategic alliances, and certification of products and processes to international standards.

Companies can also leverage on the Technology Innovation Programme to strengthen their technology innovation capability and capacity. The programme provides SMEs with the expertise, infrastructure as well as the financial support for their research and other innovation related projects.

Financing

The second area that we help our SMEs is in financing. Access to financing, as we all know, is a key concern of our SMEs. In 2005, we extended some $800 million worth of loans to more than 3,600 SMEs through the various schemes, such as the Local Enterprise Finance Scheme

, and the Micro Loan Programme. The Internationalisation Finance Scheme was launched this year, making available $500 million worth of loans for overseas expansion purposes. To complement the loans, the Government has also made available equity financing, matching Government funds with private sector investments under the Start-up Enterprise Development Scheme (SEEDS) for innovative start-ups. The Business Angel Scheme was also introduced last year to spur the level of business angel investments in Singapore.

We are pleased that the private sector has recognised that not all SMEs are high-risk, and have introduced loans and services to cater particularly to the SME market. Several banks are even offering unsecured financing products to SMEs, in the form of instalment loans and revolving credit lines.

Accessing overseas markets

The third area of concern for SMEs is access to overseas market opportunities. To build up these connections, SMEs can participate in outgoing missions and fairs as well as the various IE Singapore’s networking platforms. Companies can also tap on the International Marketing Activities Programme which supports the activities organised by trade associations and chambers.

To promote our enterprises to the world, we recently launched the BuySingapore portal. This initiative is a national e-channel that leverages on the established Singapore Brand to acquire and disseminate foreign business leads to our companies.

The Government has put in place quite a comprehensive package of assistance to our SMEs. I assure Members that we will continue to improve and adapt our assistance as the needs of our SMEs evolve.

Sir, one common feedback from the SMEs is the bewilderment over the sense of the many financing schemes that are available. I do not know if the Government is minded to put together all these schemes into one organisation. The Government has resisted the call for setting up an SME bank. I am wondering whether or not an alternative parallel organisation, which mirrors the functions of the bank and that supports these SMEs financially, in terms of the various schemes available, is something which the Government may consider.

We have debated this many times. We do recognise that there is a wide range of SMEs and we try to establish programmes that best suit the SMEs. At the same time, whenever there is a proliferation of such schemes, we try to streamline and narrow them so as to reduce confusion. I thank my colleague, Mr Inderjit Singh, for bringing together a group of people, trying to streamline and make it more comprehensive and more comprehensible to our SMEs. We must recognise that the needs of the SMEs are very diverse and this idea that a single entity or a single SME bank can meet the very vast needs of our SMEs has yet to be proven. Right now, what we are doing meets the needs and we continue to have dialogue with the various associations and the SMEs. The feedback we get is that the Government's approach is becoming more holistic and their needs are being addressed.

Sir, the 2006 SME's Development Survey found that there is a very low take-up rate of Government funding schemes. Only 8% of SMEs surveyed took up the Local Enterprise Finance Scheme; only 4% took up the Micro Loan Programme and only 2% took advantage of the SME Access Loans. What are the reasons for these very low take-up rates and what will MTI do to improve these rates?

I would like to ask the Minister for Trade and Industry to critically review these schemes with the following parameters:

the relevance of these schemes to the needs of the SMEs;

the promotion of these schemes to raise the awareness of these schemes; and

the workflow of SMEs applying for these schemes.

Is the application process, for example, too complex or too time-consuming? Are we disbursing the funds quickly enough for SMEs to use them in a timely manner?

I thank the Member for her feedback. These are areas which we will continue to look at to improve our processes. The very fact that 8% of our SMEs take up the LEFS scheme, to me, is a very good sign. First, the schemes are there. So if SMEs do not take them up, it does not necessarily mean a bad thing. But we will look into the take-up rates. It is not for lack of availability. The funds are there. There are also competing avenues for the SMEs. So it is not that they have to depend entirely on the Government for the LEFS scheme. The banks are coming in. We have an OTC market. There are many avenues. And it is good that our SMEs are self-reliant and they have their own financing resources.

Sir, in view of the impending increase in CPF, does the Minister foresee that it will bring additional burden to the SMEs, in particular, now that the SMEs are also facing a steep increase in rental, labour cost, material cost, etc?

Again, let me thank the Member for raising this. We watch the business cost very closely, particularly the business cost of our SMEs. If the changes

to the CPF that have been debated upon come about, obviously, the Government also looks at how to have countervailing measures to help the corporate sector, particularly the SMEs, to meet these challenges.

11. Ms Ellen Lee asked the Prime Minister and Minister for Finance if the Civil Service is following the private sector by giving wage increments based on performance as there is a perception that many civil service officers are still on a seniority-based wage system enjoying yearly salary increments till they reach the maximum salary within their grade, regardless of positive or negative economic growth.

Sir, the Civil Service has introduced merit increments for the majority of its graduate schemes of service since 2002. Officers receive annual increments based on their performance and potential. Better performers will therefore receive higher increments.

Besides monthly salaries, all civil servants have performance-linked pay components in the form of an individual performance bonus. This is paid out in March each year. Those who perform well can expect to receive a larger performance bonus, while those who only meet the basic expectations of their job do not receive any performance bonus.

In addition, the civil service pay package is adjusted in tandem with economic conditions through the Annual Variable Component (AVC). The AVC quantum is reduced during periods of low economic growth. Conversely, the AVC

quantum is increased during good economic times to ensure civil service salaries remain competitive with the market.

12. Ms Sylvia Lim asked the Prime Minister and Minister for Finance if he will provide an estimate of the expected additional funds to be available for Government use annually as a result of the proposed amendment to the Constitution to include realised capital gains from reserves as part of Net Investment Income.

Sir, it is not possible to estimate with any certainty the additional funds that will be available as a result of including capital gains in the Net Investment Income (or NII) from past reserves that the Government can spend. While more will become available for spending, capital gains and losses are inherently volatile and difficult to predict.

We are working out how best to overcome the implications of this volatility, the implications for our budgetary process. The Government is discussing with the President the proposed revisions to the NII spending formula. The intent, as stated earlier by the Prime Minister, is to work out a formula for spending a portion of NII on past reserves that will neither result in over-saving at the expense of the current generation, nor deplete what should be protected for future generations.

Sir, is the Minister not able to provide us with a range of the

possible funds based on past performance?

As I have said, it is volatile and difficult to predict. Past performance is not a very good guide for the future. I can tell you, for instance, that the performance for the last five years, was not as good for capital gains in the previous five years because everyone knows that there was a global equity market collapse four years ago. I would be wary of looking at past performance and saying, "That is the basis on which we project into the future."

Sir, could the Minister confirm that, to some extent, the Government has some say in whether to realise capital gains at a certain point or perhaps hold them for the next year?

The Ministry of Finance has not influenced the GIC, or Temasek, for that matter, on their decisions on when to realise investments. Let me say, more generally, that this is a very complicated issue. We are concerned about having to smooth out what are inherently volatile flows. We are working with the President to devise a formula that we think is practicable and is fair to both current and future generations. We will be coming to Parliament in a few months' time to amend the Constitution and we can have a fuller discussion then.

13. Mdm Halimah Yacob asked the Minister for Community Development, Youth and Sports (a) since its establishment, how many firms have made use of the Engaging Persons with Disabilities in Employment (ENGAGE) Fund and how many workers have benefited

from it; (b) whether this scheme covers workers with chronic illnesses; (c) whether the amount allocated under this Fund to individual companies is sufficient for them to effect changes to accommodate people with disabilities; and (d) what measures have been taken to promote the use of this Fund and the employment of the disabled.

Mr Speaker, Sir, we acknowledge that it is not easy to match persons with disabilities with the right jobs. However, I am pleased to say that we have come a long way in facilitating the employment of persons with disabilities. In the past, persons with disabilities would be kept at home and not given the opportunity to work. Now, persons with disabilities are able to find meaningful employment. For example, today, Bizlink Centre, a central job placement agency funded by MCYS and the National Council for Social Service, manages to place about 250 Persons with Disabilities into open employment annually, while another 1,300 of them are finding employment in our sheltered workshops.

My Ministry firmly believes that employment is the best form of self reliance for the disabled and will encourage all persons with disability, who are work-capable, to seek employment. However, we recognise that people with disabilities do face difficulties in securing employment, not because they are incapable but because they are often not given the opportunity to demonstrate what they are capable of.

That is why my Ministry worked with the Singapore Workforce Development Agency to set up the ENABLE Fund (Engaging Persons with Disabilities in Employment Fund) in July 2006. It aims

to encourage employers to make that first step of employing people with disabilities.

Through the process, these companies which employ people with disabilities will demonstrate that people with disabilities can also be contributing staff and they are employed not out of compassion, but based on their merit. This is what the disabled community is asking for too.

The ENABLE Fund is one of the many initiatives that my ministry has to encourage employment amongst persons with disabilities. It complements the efforts of Bizlink, which also conducts vocational assessments and onsite job counselling or coaching after placement to help the employee with disability adjust to his new work environment. For example, Natural Cool Holdings, one of the companies that has tapped on ENABLE Fund, has utilised the grant to engage a training officer from Bizlink to coach its staff.

The ENABLE fund is open to employers who are willing to hire four or more persons with disabilities. As at 15th January 2007, 14 companies have tapped on the fund, with 41 workers benefiting from it. There are another seven companies currently at different stages of discussion with the Singapore National Employers' Federation (SNEF), which administers the ENABLE Fund.

As the ENABLE Fund has just been launched, it is still too early to establish if the grant is sufficient. The Employment Sub-committee of the Enabling Masterplan is concurrently gathering feedback from the employers through focus group discussions on how to assist persons with disabilities in getting employment. The committee is a 3P effort, involving the people sector, the private sector and the public sector. In addition to voluntary welfare organisations, the sub-committee also has representatives from the National Trades Union Congress, the Singapore

Workforce Development Agency, the Singapore National Employers' Federation, the Singapore Human Resource Institute, the Ministry of Manpower and several employers. These agencies are well placed to advise on the ENABLE Fund. If adjustment to the grant is necessary, the Enabling Masterplan Employment Sub-committee will make the appropriate recommendations to my Ministry.

Meanwhile, SNEF has been actively promoting the ENABLE Fund through marketing brochures and posters, and the distribution of marketing collaterals to SNEF member companies.

A Disability Awareness and Public Education campaign has been launched in conjunction with the International Day of Disabled Persons on 3rd December last year. With greater awareness of the ENABLE Fund and public education on the abilities and productivity of persons with disabilities, I hope more companies will recognise the work value of people with disabilities and provide them jobs.

Sir, I would like to ask the Minister of State whether the Ministry is satisfied with only 14 companies and 41 workers benefiting from this Fund. If the Ministry is not satisfied, what else can be done to promote the use of this Fund? Is it a question of lack of awareness, because I do get feedback from HR practitioners and companies that they are not aware of this Fund. Is it a question of lack of awareness, or is it a question of inadequacy of the Fund being allocated, or is it too much restrictions? Could the Minister of State inform the House how it can make better use of this Fund so that we can really make it possible for people with disabilities to work?

Mr Speaker, Sir, I have said just now that this scheme was launched in July last year. It is too

early to say whether it is effective or not. Besides this Fund, we have worked very closely with NCSS and also the employers' group, including NTUC. Actually, I have just got a report that for the last part of last year, Bizlink has broken the record of successfully matching 300-over disabled people. Previously, it was 260 annually. But last year, they broke the record to over 300.

Besides this ENABLE Fund, as I mentioned just now, my Ministry also announced an Enabling Masterplan Steering Committee last September. I think some of the Members of Parliament are also involved in this Committee. This Committee will wrap up its report in January, and we are looking into some of the new recommendations.

I would also like to inform the House that the ENABLE Fund is about $0.52 million over two years, and the Government also has tax deduction on expenditure on building modifications for those employers employing disabled persons. We also set up an IDA-SPD Infocomm Accessibility Centre that costs about $1.7 million, committed over two years, to help the disabled to also learn IT technology. We hope that they will not be left out because of this digital age. Besides that, we also have vocational assessment and employment placement services that cost about half a million dollars a year. We also have a disability awareness public education campaign fund which my Ministry has set aside about $200,000 a year. So, if we add all these together, it is about $4.7 million. I am not saying that we are very happy with the result. As I mentioned, to help the disabled to get a job is not an easy task. So we need the people sector, the VWOs, the employers, MOM, WDA and so on, to work together to achieve this objective.

We look forward to receiving this report by the Enabling Masterplan Steering Committee maybe at the end of this month.

Mr Speaker, I am gratified to note that there are so many schemes available to help the disabled. But I suppose the question really is whether the Government has set itself any benchmarks by which it measures the performance of these various schemes, and that will be key towards the Government helping these disabled people.

As I have mentioned, based on the last two or three years' records, the main player - Bizlink - had successfully matched about 260 disabled persons, and they also placed about 1,300 of them in our sheltered workshop. But, last year, they broke the record to over 300 persons. So we hope to achieve that through campaigns and also through our sub-committee discussions and some of the lunches we had with all the employers. Under the Enabling Masterplan Steering Committee, one of the members of the sub-committees who heads this employment is the CEO of a bank, Mr David Wong. He gets a group of people from all walks of life, and these employers represent different groups of people like FairPrice, and so on. We hope that, with the many-helping-hands approach, we can really help the disabled persons to get meaningful jobs.

The MOS is not responding to my question. My question is really whether the Government intends to set any targets or benchmarks by which it hopes to achieve in respect of these various schemes that are available.

I wanted to tell the Member, honestly, that, in the past, we did not have a proper record of how many disabled persons in Singapore.

It is only in the last few years that we work very closely with Kandang Kerbau Hospital, through intervention, that we see that every year, we probably have about 1,400 babies diagnosed with some disabilities. Even with disabilities, there are different ranges of disabilities.

My Ministry is working very hard to keep some meaningful records, at least among the newly-born babies. So, if the Member asked me about the old people or the existing workforce, we really need to develop a meaningful target and KPI. But, of course, we should make sure that we push this through the many-helping-hands approach and the numbers should be increasing.

14. Dr Lily Neo asked the Minister for Health (a) what is the progress on efforts to promote Singapore as a medical hub; (b) what are the Ministry’s successes in targeting more foreign patients from non-traditional sources, such as the Middle East; and (c) how is Singapore faring in comparison to Thailand’s Bumrungrad International Hospital.

Dr Lily Neo asked about our progress to promote Singapore as a medical hub. We are making some progress. Over the last three years, foreign patient arrivals have grown at an average rate of 20% per annum.

Last year, nearly 400,000 foreign patients came here for treatment. Our target is to attract one million foreign patients by 2012.

We expect the medical travel market to continue to expand as the middle class grows. The competition to be medical hubs will at the same time intensify. Dr Lily Neo mentioned Bangkok’s Bumrungrad Hospital which was reported to have served about 400,000 foreign

patients per year. But there are many more such competitors in Thailand, Malaysia and India. In due course, I am sure China too will move into this sector.

Currently, patients from ASEAN countries account for about 70% of our international inpatient volume. We have begun to reach out to non-ASEAN countries, with encouraging results. There is a growing trend in patients arriving from further afield, including Russia, Bangladesh and the Middle East. These are new markets with significant potential.

To tap these opportunities, we need to increase our capacity, especially in manpower and hospital beds. We also need to raise our clinical capabilities and service standards so as to justify our higher cost premium. We will continue to push these efforts, without undermining the services to our local patients.

May I ask the Minister how does he reassure Singaporeans on the concern of compromising care for the locals with the increasing number of medical tourists?

I can reassure with action rather than words and really the key strategy is to expand capacity. Because if you do not keep on training and recruiting many more doctors and nurses, then, inevitably, as we are not closing our borders, we cannot stop foreign patients from coming in and, services will be affected. So the key is to continue to expand our doctors and nurses. And capacity as well, in terms of physical beds. Right now, I really see a need for at least one or two private hospitals to come up, and I am working very closely with URA to release land for this purpose.

Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 16, 18, 20, 22-25, 27-29 and 31 on the Order Paper are reproduced in the Appendix*. Question Nos. 15, 17, 19, 21, 26 and 30 have been postponed to the sitting of Parliament on 23rd January 2007.]

*Cols. 1067-1084.

"to amend the Monetary Authority of Singapore Act (Chapter 186 of the 1999 Revised Edition) and to make a related amendment to the Currency Act (Chapter 69 of the 2002 Revised Edition)",

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

"to amend the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 2005 Revised Edition)",

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

"to regulate the manufacture, import, supply, presentation and advertisement of health products and active ingredients used in the manufacture of health products and provide for matters connected therewith, and to make certain related amendments to the Medicines Act (Chapter 176 of the 1985 Revised Edition)

and consequential amendments to certain other written laws",

presented by the Minister for Health (Mr Khaw Boon Wan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Civil Aviation Authority of Singapore Act (Chapter 41 of the 1985 Revised Edition)",

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

3.03 pm

Mr Speaker, I beg to move,

"That, notwithstanding Standing Order No 48(7), with effect from this day’s sitting until the end of the Eleventh Parliament, a Member may use any or all of the four official languages in a speech in the proceedings of this House".

Mr Speaker, Sir, this motion seeks to obtain the House's agreement to lift the current restriction on the use of multiple languages by backbench Members in making their speeches in this Parliament. Members will recall that the restriction was lifted specifically for the Debate on the President's Address in November 2006 when Parliament opened for the session.

During that debate, Members welcomed the opportunity to make their speeches in English and mother tongues. In fact, there were a total of 13 speeches recorded in multiple languages over the four-day period. The new Members,

particularly, made use of the opportunity to deliver their maiden speeches in mother tongues and English so as to reach out to their constituents and also to a wider section of Singaporeans.

Mr Speaker, Sir, this Parliament has seen the entry of more Members who are bilingual or proficient in more than one of our official languages. This is the result of our education system, which has placed emphasis on bilingualism, and nurtured a new generation of Singaporeans who are comfortable in both English and their mother tongue. Though English will remain as the common working language for Singaporeans, there is room for greater use of dual or multiple languages in our Parliament when national issues are debated, so that Singaporeans of all races and all generations can be engaged on these issues.

Sir, allowing Members a greater opportunity to use mother tongues in this House will not only make for more effective debate, especially when the issues can be better expressed in their own language context, but will also allow the House to reflect the multi-racial and multi-lingual heritage of Singapore.

In line with this, there will be changes made to the Official Reports of the Parliamentary Debates to incorporate the written transcripts of mother tongue speeches, for public record and access. Now, copies of speeches made in non-English by MPs in this House are already available for Members' reference and these are deposited in the Parliament Library.

I believe Members will welcome these changes to our House proceedings and support this motion.

Sir, I beg to move.

Question proposed.

3.06 pm

Mr Speaker, Sir, I rise in support of the motion, as moved by the Deputy Leader of the House.

The use of any or all of the four official languages in a parliamentary speech will provide more flexibility for Members of this House to conduct our debate more effectively. It will also facilitate the broadcasting of parliamentary debate to Singaporeans in different languages through the TV, radio and new media channels. As a multi-racial society moving towards a cosmopolitan society, it is necessary that parliamentary debate be conducted in different languages so that Members of Parliament are able to express their views and the concerns of our people using different languages in parliamentary speeches. This is even more crucial for elected Members of Parliament who represent their constituents to provide feedback to the Government.

The use of the different official languages in a speech will also enable elected Members of Parliament to better express their concerns of their constituents in this House, and at the same time help Singaporeans to better understand the contents of parliamentary debate.

Sir, as an elected Member of Parliament for Bukit Panjang constituency, I have always made it a point to translate key points of my parliamentary speeches into the four official languages and publish them in my constituency newsletter - Bukit Panjang News Express. Feedback from my residents is that they find it useful to understand my parliamentary work and also the issues which I have championed for them in Parliament. The translation of my speeches in my newsletter has also allowed my residents, especially those who are monolingual, to

better understand national policies and parliamentary debate. Thus, the use of different languages provides opportunity for Members of Parliament to better connect and engage Singaporeans.

Sir, I support the motion.

3.08 pm

Mr Speaker, Sir, I would like to deliver my speech in Mandarin.

(In Mandarin ): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, let me thank the Deputy Leader of the House, Mr Mah, in moving this proposal to allow the use of different languages in a same speech. This proposal is far-sighted. It allows the MPs more flexibility in using any one or more of our four official languages to better reflect the feelings on the ground. At the same time, it allows the different communities in Singapore to listen directly to the MPs using the languages they are most familiar with. To the many citizens who do not know English, especially the senior citizens, this is definitely good news. Now they can listen directly to the MPs and understand the contents of their speeches in the language that they are most familiar with. If the various communities in Singapore can understand the contents of parliamentary debate, Government policies will certainly be disseminated to the public more effectively.

Singapore is a multi-racial society and, in our society, there are many senior citizens who do not understand English. This may well be one of the reasons why hitherto, they are not very keen to follow parliamentary debates. Of course, one of the reasons may be that they are confident that the Government will discuss and make decisions which are in

the interest of the country. It is also possible that many senior citizens do not know English, they simply give up watching televised reports of parliamentary debates. Although there is simultaneous interpretation into Chinese, Tamil and Malay in Parliament, it is always better to hear the MPs themselves speaking in the language that they are most familiar with. If Parliament is debating a topic which is of concern to them, and the MP can use the mother tongue, it will certainly improve the effectiveness of communication. The people will be more interested and concerned with the issue in question. This is in line with Government's policy to allow more people to understand the broad directions of our policy. This is most beneficial. So I personally fully support this proposal to allow the MPs to use one or more of the official languages.

At the last sitting of Parliament in November 2006, PM suggested that the MPs be allowed to switch to the other official languages in their speeches. This proposal was moved by the Leader of the House and approved by Parliament. Almost all of us are in favour. But the suspension of Standing Order was an ad hoc measure that allowed the MPs to use more than one language in a speech, only during that particular sitting. This is not good enough. When many of my MP colleagues knew that the Deputy Leader was going to move this motion to allow MPs to use multiple languages in one speech once and for all, all showed support and enthusiasm. On behalf of all my parliamentary colleagues, I would like to thank the PM for his suggestion and the Deputy Leader for moving this motion.

Singapore is a multi-racial country and I would like to express my thanks in all the four official languages. In English, we say, "Thank you". In Malay, we say, "Terima kasih". In Tamil, we say, "Nandri." In Mandarin, we say, "Xie xie".

Sir, I support the motion.

*Cols. 1101-1102.

3.12 pm

Mr Speaker, Sir, I rise in support of the motion raised by the Deputy Leader of the House.

The Singapore language policy has always included a promotion of bilingualism, mastering English as a language for commerce, education and also administration, and certainly using Mandarin as a unifying language for the Chinese community. Passing this motion would be in line with the promotion of our cultural and lingual diversity in a multi-racial, multi-cultural and multi-lingual society. We, Members of the House, leaders in our community, must set the example and spearhead the efforts in Parliament. We shape our language and certainly our language shapes us as well. Using our mother tongues in our speeches will enable a greater connection with members of our community, especially those who do not understand and speak English.

According to the General Household Survey of 2005, for example, about 24% of Chinese households do not use English at all and we have a relatively similar number for Malay households as well. These are exactly the segment we will be reaching out to with this new policy. They will now be able to connect better with their Members in Parliament and follow and support their speeches closely. With a language familiar to them, they will be more at home, and we certainly cannot deny that certain issues when discussed and spoken of in a certain language can create and generate more emotions, greater passion and also impact than when stated in English. This is a known phenomenon and may be related to the way our brains encode messages and information in the limbic system. It is also human nature to click and connect with those with similarities to you and

particularly those who speak and understand the same language. When we speak at our election rallies, we used a combination of languages. And it is timely indeed for this practice to be extended to this House.

Singapore is small in size but big on languages. This was reported as early as 1991 in the Business Times of 15th November and our parliamentary Chamber will now be more of a linguistic stage with diversity in languages co-existing in a very dynamic way, reflecting our national integration. It will also emphasise the conservation of our mother tongue and indeed a very positive step in fostering further rootedness among Singaporeans. There are already many other nations that have adopted the dual or multilingualism policy, and these would include Scotland, Malta, Wales, Canada and Hungary, just to name a few.

Many of these nations have agreed that members have the right to use their mother tongue when addressing Parliament and in their public service.

When we have visitors to our Parliamentary debates, it would be excellent to showcase our multi-lingualism, which is unique and inspiring indeed. Moreover, with more foreign talents coming to reside within our borders, this practice will raise the profile of our languages as it will be seen not only as being spoken at home, the markets and in the coffeeshops but in Parliament, where important issues are discussed and critical decisions are being made.

The importance of the usage of our mother tongue will also have far-reaching benefits in the region and, in particular, countries such as Malaysia, Indonesia, China and certainly India as well. Therefore, our bilingual capabilities are highly valuable and must be utilised as widely as possible. After all, when a real leader speaks in any language, people

listen. Words in the appropriate language can do so much more. They can convey or create a mood, an attitude, an atmosphere or even an awakening.

Mr Speaker, Sir, I support the motion.

Sir, I support the motion moved by the Deputy Leader of the House to allow Members to use all four official languages in their speeches. Mr Low Thia Khiang was asking me whether I was supporting the use of Punjabi. It is not an official language, but I understand Malay quite well. I studied it until my A-levels.

Sir, I notice in the past that Members, in making their speeches, some of them felt quite constrained when they were forced to use just one language to deliver their speeches. Some Members were effectively Mandarin-speaking, and when they deliver their English speeches because they had to deliver speeches in English, they felt a bit uncomfortable. Similarly, those who were English-speaking and wanted to deliver Mandarin or Malay speeches, I could also sense an uneasiness when they delivered their speeches. Hence, if we had that flexibility in the past, I am sure Members would have delivered certain portions of their speeches in English and certain portions in their mother tongue and, therefore, making their delivery a bit neater and more interesting to listen to.

Today, more Members are bilingual and equally comfortable in both English and their mother tongue. So, I think we should not restrict them if they feel comfortable in making their speeches in any of the official languages that they choose to. We have a very efficient translation service in Parliament. So I do not foresee any reduction in understanding when Members switch their speeches from one language to

another. Therefore, Members of this House should not feel that we will not be able to follow the speeches if the switch is made. Of course, I do not see any Member in this House speaking in all the four official languages. But if Dr Vasoo was still in this House, perhaps he may have been the one that could have delivered in all four languages.

Sir, I did ask a number of my grassroots leaders, some friends and also a few residents that I met, and every one of them told me that they actually liked the flexibility that they saw during the debate on the President's Address. Many of them told me that it added colour to the debate. As I said, I myself studied Malay as my second language. I enjoyed the speeches that were made in both languages.

Sir, I therefore feel that the motion is a move in the right direction and I support it.

Mr Speaker, Sir, I thank all the Members who have spoken for supporting the motion. I cannot agree with them more on the sentiments that they have expressed. I think the most important point that all Members have made is that we are sending a signal, if Parliament approves this motion, that it reflects what Singapore is, ie, we are a multi-racial, multi-lingual society and we need to have this diversity of languages reflected in Parliament, especially where important matters are discussed. So, I hope that Members will approve this motion.

Let me, as an aside, explain to Mr Sam Tan that this motion is only for the duration of the Eleventh Parliament, because we will need to amend the Standing Orders if we wish to make this change permanent, and we do not intend to amend the Standing Orders until an appropriate time.

May I thank Members again for supporting the motion and I hope for Parliament's support.

Question put, and agreed to.

That, notwithstanding Standing Order No. 48(7), with effect from this day's sitting until the end of the 11th Parliament, a Member may use any or all of the four official languages in a speech in the proceedings of this House.

3.19 pm

Order for Second Reading read.

Mr Speaker, Sir, on behalf of the Senior Minister, I beg to move, "That the Bill be now read a Second time."

Over the past few years, MAS has progressively liberalised the banking sector. At the same time, MAS has also sought to implement a risk-based supervisory approach that moves away from the one-size-fits-all rules and allows for well-managed risk-taking. The measures have resulted in more choices for consumers, new innovative products and competitive pricing. With the free play of market forces and the growing complexity and international nature of banking businesses, there will also be new risks to be addressed. For example, depositors are now increasingly exposed to the risks of both local and foreign banks’ expanding international operations.

MAS continuously reviews and refines its regulatory framework to ensure that it is robust and responsive, without adding undue burden and cost to the industry; a framework that upholds prudential standards and the interests of depositors, while fostering the growth of the sector. The Banking (Amendment) Bill is part of this on-going process. It introduces

several new policies and measures to strengthen prudential standards, facilitate risk-based supervision and provide banks with greater operational flexibility.

In preparing this Bill, MAS has consulted extensively with the industry and the public on the policy changes and the draft Bill. The feedback received was carefully considered, and incorporated into the Bill where practicable and consonant with its regulatory objectives.

Mr Speaker, Sir, I will now go through the major amendments in the Bill.

Strengthening prudential safeguards

The first set of amendments is to strengthen the prudential safeguards. On this, I would elaborate on three main amendments.

First, is the revision of methodologies for limiting large exposures and related party exposures. Currently, section 29 of the Banking Act sets prudential limits on credit facilities extended by banks to a single borrower or a group of related borrowers. It also curtails unsecured credit facilities to parties related to the bank. These prevent the default of any single borrower from seriously impacting the financial strength of a bank.

MAS is introducing a number of changes to ensure that the prudential limits remain relevant and are in line with international best practice. First, instead of a limit based on credit facilities granted, the Bill introduces a more comprehensive measure based on exposures, which would include a bank’s equity investment in, as well as other transactions with a counterparty. The second key change is that MAS will recognise a bank’s efforts in mitigating risks, by allowing the bank to offset its exposures where these are secured by qualifying collateral, or to substitute its exposures to a counterparty with that of a

credit protection provider of good rating. To reduce the risk of contagion and non-arm’s length transactions between a bank and a related party, the current limit on unsecured lending to related corporations will be widened to restrict the exposures of a bank incorporated in Singapore to its substantial shareholder groups, and exposures of a bank in Singapore to entities in which the bank holds a major stake. The industry will be given a two-year grace period to make the appropriate adjustments for compliance with the revised section 29.

Introduction of an asset maintenance regime

MAS’ liberalisation measures in the last few years have brought about greater foreign bank participation in our banking sector. While the competition has added to the dynamism of the banking sector, the banking system will increasingly be exposed to risks arising from the foreign banks’ international operations. Should a foreign bank fail, the resolution of a cross-border bank insolvency will be complex and drawn-out. The claims of depositors and creditors will be subject to substantial uncertainty.

The revised section 40 aims to strengthen the foreign bank regulatory framework by requiring foreign full and wholesale bank branches to maintain a minimum level of eligible assets in Singapore in proportion to their deposit liabilities. This would help to improve the recovery of assets from a failed foreign bank branch in Singapore to meet the claims of Singaporean depositors.

The asset maintenance requirement has been carefully calibrated to balance prudential objectives with the banks’ commercial interests, and determined after close consultation with the industry. A six-month grace period will also be

given, for foreign bank branches to make necessary adjustments to their asset allocations.

Amendment of the priority ranking of deposit liabilities

Presently, both non-bank and inter-bank deposit liabilities of a bank rank ahead of other unsecured liabilities in the event of a winding up of a bank. In recognition that non-bank depositors are likely to be less well informed than banks and in greater need of protection, the Bill reorders the priority ranking under section 62 and places all non-bank deposit liabilities of a bank ahead of inter-bank liabilities, with the latter ranking pari passu with other unsecured creditors. This is consistent with the objective of protecting non-bank depositors and encouraging banks to exercise prudence and market discipline in respect of exposures to their bank counterparties.

Enhancing MAS’ role in bank resolution

The next set of amendments is with regard to MAS' role in bank resolution. While MAS seeks to promote and preserve stability in the financial system through high standards of licensing, regulation and supervision, like many reputable regulators, it does not aim to prevent the failures of all financial institutions. Such a "zero-failure" regime is neither feasible nor desirable as it leads to considerable moral hazard for the regulator and places an excessive regulatory burden on our financial institutions. When dealing with a bank in distress or insolvency, a private sector resolution option is often preferred by regulators, but in the event that this is not possible, international experience has shown that it is important for the regulator to be able to take action quickly to minimise losses to depositors and other creditors, and to maintain stability in the entire financial system. The Bill will accord MAS a wider role in the resolution

process and a broader range of resolution options.

More specifically, the new section 54A provides MAS the right to be heard in insolvency proceedings of a bank and the power to approve the appointed liquidator. Part VIIA introduced by the Bill also empowers MAS, with the approval of the Minister in charge of MAS, to direct the sale of the business of a bank and in the case of a bank incorporated in Singapore, to require the issuance of new shares, to restructure the share capital or to sell existing shares to other investors. Before it can exercise these powers, MAS has to consider the interests of depositors of both the transferor and transferee, as well as the stability of the financial system in Singapore. The affected parties will be given a right to be heard prior to the Minister’s approval of such a transfer, except where it is not practicable or desirable to do so, for instance, where an expeditious transfer is crucial in maintaining financial system stability.

Facilitating risk-based supervision and allowing operational flexibility of banks

Let me now turn to how the amendments will facilitate risk-based supervision and allowing operational flexibility of our banks. Consistent with the risk-based supervisory approach

adopted by MAS, the Bill will allow the calibration of prudential requirements according to an individual bank's financial strength, its risk profile and its risk management capabilities. Let me provide a few examples. The revised section 29 allows MAS to raise the large exposure limits for individual banks where there are strong justifications. Under section 40, a higher asset maintenance requirement may be imposed on banks that pose greater supervisory concerns. The amended section 38 will allow banks the operational flexibility to draw down their liquidity reserves to deal with liquidity stress situations. In addition, in view of

the industry's need to move nimbly in a fast-paced environment, the new section 76A will allow MAS to grant exemptions from requirements in the Act in specific situations where the prudential objectives are not compromised.

Under the current regime, only banks and non-bank financial institutions are subject to MAS' rules on the issuance of credit cards. The new Part VIII extends MAS' regulatory scope to all issuers targeting the Singapore market and not just banks and financial institutions. Entities that have not been approved to issue credit cards in Singapore will be prohibited from soliciting for or accepting card applications in Singapore, and this applies equally to third parties acting on their behalf. MAS will be empowered to inspect the operations of approved credit card issuers for compliance with MAS’ rules pertaining to credit card operations.

The proposed regime also clarifies that single party merchant credit is exempted from regulation. Such an arrangement, where the card is really used only for transactions with the issuer, is essentially a deferred payment scheme offered by merchants to their customers. In addition, a new exemption for cards granting credit in small amounts not exceeding $500 will be introduced. This allows flexibility in payments for small-ticket items without raising substantial concerns about Singaporeans spending beyond their means.

Let me now turn to the other amendments that are needed to update the banking regulatory framework:

Section 22, which requires a bank to maintain a reserve fund. This will be repealed in light of enhancements to MAS' regulatory framework over the years, and the banks will be allowed to release their reserves over a five-year period.

Section 5, which restricts the use of the word "bank" to protect consumers from being misled as to the status of the entity they are dealing with, will be amended to accommodate legitimate uses of the word, such as representative offices of foreign banks; international financial institutions like the World Bank, Asian Development Bank; and where it is used in a non-financial sense, such as "Blood Bank" and "Infobank".

The amendment to section 4B will provide flexibility for MAS to exclude or include any financial product from or in the definition of "deposit". This is necessary to facilitate MAS’ response to innovative products that either legally satisfy the definition of "deposit" but do not meet the economic characteristics of a deposit, or conversely meet the economic characteristics of a deposit but do not satisfy the legal definition of "deposit". An example of the latter is a murabaha investment - an Islamic variant of a time deposit. Products that are prescribed as deposits will be accorded priority ranking in the event of a bank winding-up and protection under the deposit insurance scheme.

The amendments to section 26 will permit MAS to disclose only non-customer information provided by banks to MAS under limited circumstances, such as for the purpose of sharing aggregate information at international fora and contributing to research projects. This is to balance MAS' responsibility for surveillance and supervision of the financial sector with its commitment to preserve the confidentiality of individual banks' information.

To underscore the importance of accurate reporting of information to MAS, section 66 will be amended to extend the obligation - currently imposed on directors and executive officers - to any

person who furnishes information to MAS to exercise due care in ensuring that the information is not false or misleading.

Finally, the new section 54B will explicitly provide MAS with the powers to direct the removal of directors from the board of a Singapore-incorporated bank, if these persons fail to perform their duties and functions, to protect public interest and depositors. This is in line with international standards and the practices in reputable jurisdictions.

Conclusion

Mr Speaker, Sir, a sound and vibrant financial sector is an integral part of ensuring the success and resilience of the Singapore economy. These amendments to the Banking Act are part of an on-going process to enhance the robustness and responsiveness of our banking regulatory framework, in tandem with the growth in scope and sophistication of the activities of the banks in Singapore.

Sir, I beg to move.

Question proposed.

3.37 pm

Mr Speaker, Sir, I support the proposed amendments in the Bill. The Bill is definitely a step in the right direction when we consider Singapore's efforts to become a major world financial centre. I have comments on six areas of the proposed amendments to the Banking Act, as follows:

The first comment is on section 4B. The Bill proposes widening the possible definition of "deposit" in section 4B. This is a positive development and I welcome it. Sir, there is a trend of capital movement from the west to the east, particularly from the Middle East. We need to be ready for this expected surge in capital, including that from the Arab

world, where many are owners of the capital.

I hope that the banks will take up the challenge to devise new, Syariah -compliant financial instruments, including deposits, that will give these owners options to invest their capital here. Additionally, Islamic banking instruments may also appeal to a wider population, as has been experienced elsewhere.

I would say that we may even need to go further because now is the right time for Singapore to position itself as the key centre outside the Arab world for Islamic banking. I was hoping to see more done to make Islamic banking a reality in Singapore. MAS therefore should form a focus Committee or workgroup to seriously develop Islamic banking options in Singapore.

Sir, however, the widening definition of "deposit" may catch some consumers unaware as they may view some products as principal-guaranteed when they may involve hidden risks or costs. What restrictions exist or are proposed to prevent the introduction and marketing of such products and, in particular, of them being labelled as straightforward "deposits"?

The second comment is on section 22 which is the abolishment of the reserve fund. I would like to ask the Minister how the reserve fund is presently maintained and whether the repeal of the requirement is expected to lead to an outflow of capital from Singapore. If so, will this not lead to excess supply of Singapore dollars on the market and lead to a risk of fluctuation in the currency value? Especially at a time when the US dollar is in a trough, it may not be wise to risk any fluctuation that we can avoid.

Sir, the third comment is on the prudential safeguards on the proposed amendments to sections 27 to 29 of the

Act, I note that these amendments will likely involve some dislocation of certain parties, but that it will make for a stronger industry as a whole where the risks are acceptably spread out by the banks. This will also benefit consumers by giving them greater assurance of the stability of the banks where they entrust their money to. I welcome, in particular, the shift to an exposure-based regime of disclosure. What this change means is that banks that have large exposure to groups of related entities will have to scale back on this exposure.

Further, in the case of DBS Bank, which has large exposure to Government-linked companies (GLCs) in terms of supporting their financing requirements, I think that the proposed amendments will provide an impetus for a few things:

First of all, DBS will have to source elsewhere for business that it may have to forgo as a result of the Bill. This is a good opportunity for them to exploit other markets. Hopefully, it will also make DBS (and other such banks) more open to innovative funding arrangements, especially funding more SMEs.

GLCs will also have to source funding on market-driven principles, having to satisfy lenders not linked to the Government that they are viable credit risks.

Specifically, could the Minister enlighten us as to whether Temasek, which is a core part of Singapore's investment strategy, will face any significant challenges because of the proposed amendments since many of its related entities bank with DBS and Temasek also owns DBS?

Sir, MAS' ability to exempt certain banks or categories of banks from operation of these limits in its prudential safeguards, which is in section 29(3), is potentially sensitive, especially if it works

in favour of local banks. I suggest that this be taken into consideration before any exemptions are made, which must be well-considered and judiciously made.

As regards the disclosure requirement itself in section 27(1) of the Act as proposed, it would require a statement on exposure by banks in Singapore. Checking on this looks like a difficult task for MAS. In the case of foreign banks, their exposure may be spread wider geographically than local banks. Has the feasibility of checking on compliance been considered by the Minister and MAS?

Further, some of this disclosure may involve clearance from regulatory authorities overseas due to their banking secrecy Act, for example, in the case of disclosures that involve exposure to banks or customers of banks overseas.

Finally, local banks are required to include their Asian Currency Units (ACUs) exposure in their calculations while foreign banks operating ACUs are presently exempted from this by reason of the transitional provision in clause 67(9) of the Bill. There may be a disproportionate impact on the numbers reported by local banks because of this. I hope that we are not unwittingly imposing more difficult conditions on local banks that would favour foreign banks.

The fourth comment is on sections 38 to 40, which are on the asset maintenance regime. I would like to seek some clarifications from the Minister.

Sir, on the proposed amendment to section 38 which concerns minimum liquid assets, the Bill contains new powers for MAS to deal with banks in relation to a minimum liquidity required, especially for liquidity stress situations. This is, of course, good for the consumers.

The Bill, however, also changes the period for altering the minimum liquidity to three days, instead of the previous one month, under section 38(3). MAS has clarified that, in practice, it will continue to act in consultation with industry, and the three-day period for altering the minimum liquidity will only be used exceptionally. If this is the case, why is there a need to reduce the statutory period for compliance to three days? Why not instead stick with a longer limit, while providing for a shorter limit to be no less than three days?

Sir, the three-day limit in the provision could seem very onerous for financial institutions. Hence, it may work against the long-term aim of making Singapore a financial hub. I therefore suggest that a ministerial check be written in as a safeguard for invoking this minimum period which means that we should not do it at the very first instance. Can this check be introduced in the Act?

In section 39 as proposed, and this concerns minimum cash balances, this provides flexibility to MAS to deal with different banks differently. In my opinion, this is also a good idea.

Also, the financial penalty provided for in section 39(7) should be provided for in the Act itself instead of being left to subsidiary legislation. Is there a good reason why it is removed from this Act?

Sir, in section 40, which covers the asset maintenance requirements and the related sections 49 to 55, which concern certain powers of MAS, could the Minister please enlighten the House on how other major financial centres handle such asset maintenance?

Sir, even the best of regulations cannot totally rule out flight risk of capital when banks are in stress. What is the experience of other jurisdictions in reducing flight risk of capital on impending

insolvency and how can the chances be minimised in Singapore? What are the lessons learnt from other areas?

As regards the powers of MAS to step in and manage the affairs of banks in or approaching insolvency, what is the role of MAS when it moves in to control a bank as provided for in this Act? What are its objectives when it takes over the running of the operations of such an insolvent bank? Will the current insolvency procedures, applicable for all companies, not be sufficient? Why the need for these additional changes?

Sir, my fifth comment is on section 62, which concerns the priority ranking of depositors. The proposal to put non-bank depositors ahead of bank depositors is a welcome move as it will provide protection to the less sophisticated depositors. Could the Minister clarify whether it is expected that there may be a move by some banks to concentrate their deposits in other banks that do not accept significant deposits from non-bank depositors? This is so that they can avoid being pushed back in the queue.

The sixth comment is on sections 57 to 57G which are on credit cards and credit. This is a welcome move and we have seen many of our residents, who have been in this downward spiral of debt. In extreme cases, people borrow from one credit card company using one facility to service debt taken from another facility at a very punishing interest rate. They quickly run out of options and face a mountain of debt and also bankruptcy.

I therefore welcome the tightening of the rules that control credit card issuance and the extension of credit. Sir, I have a few questions for the Minister.

First of all, the proposed section 57(3) would catch advertisers, especially since section 57(8)(c) (not knowing that advertisement would breach the law) is

difficult to apply, in my opinion. Can this be revoked to provide effective protection for advertising agencies when they have to apply this?

In section 57D(1), this gives the power to issue directions but subsection 4 provides for high fines for violations. Subsection (2) also provides that the directions are not subsidiary legislation. The combined effect of sections 57D(2) and (4) blurs the line between subsidiary legislation and directions. For subsidiary legislation, there is an obligation to publish it in the Gazette, so we cannot say that ignorance of the law is no excuse. Is it not more appropriate to have the directions instead published as subsidiary legislation?

As regards section 57E, there is no provision for informing the public upon revocation of a licence. There is also no requirement for a licensee whose licence is revoked to notify at least their ex-customers. Further, subsection (2), requiring the licensee to prevent the use of cards after the licence is revoked, is likely to be practically unworkable and may be difficult to comply with. Subsection 3, while preserving transactions that took place before revocation, says nothing about transactions that took place after revocation. There is potential impact on third parties that has to be addressed. Can this section, therefore, be revoked to take this situation into account?

What is the Government's policy on mass-providers of credit to lower income groups that are usually targeted with credit cards (ie, those earning income below $30,000)? For example, we have seen extensive advertising over the last year of lending of smaller amounts by a commercial credit provider that is not subject to the Banking Act. Advertisements for such credit are plastered all over MRT stations, taxis, among other places. Will this likely affect the market

estimates on the credit and default and indebtedness problems arising from over-borrowing?

Do we want the Banking Act to be the only legislation governing mass-providers of credit? If so, what other changes would be necessary to other legislation, for example, the Moneylenders Act (Cap. 188)? Can we bring both of these Acts, or at least the institutions licensed under them, under the same monitoring agency to provide for better control of their activities? So, credit card debt is, therefore, not the only problem. It is the other type of debt that may exist.

Sir, in conclusion, this being a very technical Bill which is difficult to understand, but I managed to understand most of it, I hope that the Minister can clarify the points I have raised. But, overall, I think this is a good Bill and I support the amendments.

3.46 pm

Mr Speaker, Sir, the amendments are comprehensive and will empower MAS to better manage the new dynamics of the banking sector in the years to come. I have only one comment on the Bill. This relates to credit card advertisements and promotions by banks, section 56, subsection 5 (page 68). How do Net advertisements or solicitations come under this section, if a foreign bank originates it outside Singapore but intended for a Singapore audience, or as part of a regional marketing exercise of which Singapore is one target market? Sir, the Internet is still very much a grey area that transcends territoriality. Is it possible to develop more granular controls on Net advertisements and promotions?

Sir, I also have a number of other issues to raise relating to the development of the banking sector in Singapore. Unlike Mr Inderjit who has digested the technicalities, I am raising another perspective. The first relates to developments in credit card technology. Sir, we have seen recent cases of credit card skimming and credit card fraud perpetrated by foreigners, precisely because we use magnetic-striped cards. The continued targeting of Singapore by these fraudsters may undermine our reputation as a trusted financial hub. On the other hand, credit cards with embedded microchips have reduced card fraud by as much as 80% in countries like France. Under these circumstances, I would like to ask if MAS would mandate the adoption of EMV microchip technology to replace magnetic stripe-based cards. I understand this may be a costly exercise for banks. But I would like to argue that the cost is worth our reputation as a trusted financial hub, as well as for the reputation of the banks themselves. My second question concerns two-factor authentication. MAS has mandated that local banks adopt two-factor authentication (2FA) to provide stronger security for e-banking. But feedback by bank customers indicates that it may be inconvenient for them to carry multiple tokens for different bank accounts. I would like to ask if there is a better alternative that provides more convenience but does not sacrifice the added security. Sir, my next question is about phishing or anti-phishing. Phishing is becoming more rampant around the world. Security experts tell us that phishing attempts are moving away from the USA and Europe to the Far East. Singapore banks have also

been the targets of phishing attacks in the past. One reason why phishing continues unabated is because phishing sites are often located in servers in third countries where banking laws are not so strict. Many security experts believe the answer lies in more effective inter-governmental collaboration. In view of this, I would like to ask: What are the prospects for increased inter-governmental cooperation in combating phishing? What are the prospects and challenges for a global or inter-governmental agreement in combating phishing and similar crimes? Sir, one issue that crops up regularly among SMEs is the need for a SME Bank. As business organisations, banks naturally gravitate towards higher-yield activities. This, coupled with more stringent banking controls, may make financing for SMEs less attractive. SMEs, on the other hand, need a good source of funding to help them grow and regionalise. According to the 2006 SME Development Survey, a good 40% of SMEs depend on overdrafts as their main source of short-term funding. This is an expensive option for them. While the situation has improved slightly in the past three years, the financing structure for SMEs has not changed at all. Overdrafts remain their main source of short-term funding (40%), followed by trade financing (32%), term loans (27%) and factoring (7%). Sir, less than one in three SMEs (27%) are able to secure loans to finance their growth. Clearly, this structure needs to be corrected. Can MAS look into the feasibility of an SME Bank to assist SMEs finance their growth and to go regional? The SME Bank can provide a wide range of financing options designed for SMEs and on more competitive terms. This will, in turn, help our SMEs to become more

competitive in their markets. The SME Bank can also provide first- or second-round funding for start-up companies, thus supporting our drive towards greater entrepreneurship. Sir, I believe such a bank can be viable financially. More importantly, it can provide the much-needed impetus to help our SMEs grow and expand regionally. Sir, my final comment relates to the marketing of financial products. We all know that banks do not make much money by accepting deposits. They do make money by selling their depositors additional products such as unit trusts, insurance policies or structured deposits. In the case of structured deposits or investment products, customers are not made aware of the many and often substantial hidden costs in these products. While they are promised protection of their principal sums, many of the management costs of these products are often deducted upfront. So, in cases where the returns on these products are minimal, depositors may actually lose part of their principal.

In light of this, banks must demonstrate greater transparency by advising their customers of the hidden costs of these products. A related area of concern is the way banks target specific customers who have deposits of a certain size. This clearly violates the privacy of the customer. Banks have obviously made use of privileged customer information to target their customers for cross-selling. Do customers have any safeguards to protect their information? MAS should mandate that banks do not use confidential customer information for any other purpose than normal transaction and communications.

MAS can also require banks to put up prominent warning labels to alert customers that there are risks attached to

these ‘safe’ investments. This is similar to the warning labels put on cigarette packs.

Sir, I believe these are major issues that will require the attention of MAS to further strengthen Singapore’s position as a trusted financial hub and banking centre. Sir, on these, I rise in support of the Bill.

Mr Speaker, Sir, I thank both Mr Inderjit Singh and Mdm Ho Geok Choo, who obviously have mastered the amendments very comprehensively and have suggested many comments and improvements. I believe Mr Inderjit Singh raised six points and Mdm Ho raised four. So there are 10 points altogether. I hope Members would bear with me as I go through these points.

First, Mr Inderjit Singh talked about Middle-Eastern funds and the definition of deposits. I agree with Mr Inderjit Singh that we have to deepen our engagement with the Middle East and attract Middle-Eastern funds into Singapore. Our aim is not so much to become a centre for Islamic finance but to build upon our existing strength as an international financial centre. In this regard, we are working with the industry to ensure we have a full suite of financial products and services, including Islamic products and services. We have been reviewing our legislative framework to ensure what we have is conducive to all these new Islamic financial products. Our approach has also been to level the playing field, ensure the neutrality of rules so that anybody coming up with innovative Islamic financial products will not find that they are operating against regulations which are not in their favour. So the neutrality of rules will therefore apply to both conventional and Islamic products and services wherever possible.

Mr Inderjit Singh suggested a Committee to address this. I think this is a good point. In fact, MAS has been working with industry players to tap the views of all the players as to how to develop their products and to make sure we are able to engage the Middle East and to be a player in Islamic finance. So I agree that MAS will continue to deepen its engagement with the industry players.

On the issue of definition of deposits, I recognise that consumers sometimes may be confused whether what they are buying into or what they put into is essentially a deposit or not. That is the reason why we have some of these amendments. Let me clarify that we are not widening the definition or the scope of a deposit. What we are seeking to amend the Act is to allow the MAS to recognise certain products that meet the economic substance of a deposit, ie, that the principal is guaranteed but does not quite satisfy the legal definition of a deposit. Some of these products relate to the Islamic financial products. By clarifying the definition, I think it makes it better for us.

When Mr Inderjit Singh refers to complex deposits, I suppose he is probably referring to structured deposits. Some of these products are advertised as deposits but they have features which require you to take a risk on your deposits. All structured deposits are, in fact, currently subject to higher product disclosure requirements, as set out in the Financial Advisers Act. These are the guidelines on structured deposits. This is to ensure that people who buy into such products know what they are buying into and they know that this is not a straightforward deposit.

The second point which Mr Inderjit Singh raised is the outflow from the reserve fund and its impact on the Singapore dollar and the flow of funds out of Singapore. Let me explain that the

reserve fund is essentially the retained earnings that belong to the shareholders. This has been kept under section 22, and this was intended to raise the reserve requirements for the banks

as they build up their reserve requirements. Under section 22 previously, the banks were not allowed to distribute to their shareholders. There is now no longer this requirement to maintain the reserve fund and in fact we do not require the fund to be maintained in any particular form of asset. So with the repeal of section 22, and we allow this to be done over five years, we do not foresee any difficulties that Mr Inderjit Singh pointed out that there will be this huge outflow of funds affecting the Singapore dollar.

The next area that Mr Inderjit Singh raised is regarding the prudential safeguards, particularly the large exposure limits. Let me assure the House and Mr Inderjit Singh that MAS has conducted several consultations with the industry on the revised framework and we do not expect the banks to have any significant difficulty complying with these new rules. But, nevertheless, we still have a two-year transition period for the banks to modify their systems and to make the necessary preparations.

Mr Inderjit Singh asked whether the exemptions are necessary. Essentially, we need to strike a balance between setting out the requirements in a very transparent and stringent manner as well as giving MAS the flexibility to deal with the situation as it arises. So it is this flexibility that MAS needs. Especially in situations of restructuring or in a resolution of a bank failure, MAS needs some of these exemptions to give it the flexibility.

Mr Inderjit Singh cautioned that MAS' use of such exemption powers may be seen to be based on MAS own requirements and may not be seen to be

transparent. So I think we have to strike a balance. Let me assure Mr Inderjit Singh that the exemption power does not relieve MAS of its duty to ensure that when it exercises such powers, it exercises it on good defensible grounds and where there are strong prudential justifications.

Mr Inderjit Singh also asked about the regulation of foreign banks and how the exemption of exposures booked in the ACU of a bank incorporated outside Singapore would present problems with us. We have to work closely with our counterparts in other jurisdictions, just as we regulate or supervise the branches of foreign banks here. Similarly, our counterparts in other countries would also supervise or regulate the branches of Singapore banks. This close regulation and cooperation between regulators will allow us to make sure that the regulations cover across borders.

The fourth area is the minimum liquid asset and the asset maintenance requirements. Basically, what we are confronted here with is the problem of maintaining liquidity when there is a stress on the banks. Liquidity risk is a critical risk for the banks and, in normal circumstances, of course, the liquidity requirements of a bank for its day-to-day operations can be reasonably anticipated, and the MAS has no reason to make any sudden changes to the minimum liquidity requirements. The three-day grace period that we are seeking for really only addresses when there is severe adverse liquidity position of a bank. We will only impose this after careful assessment of the situation. A bank which has insufficient liquidity to make its claims can very quickly accelerate into a crisis of confidence and bring down the bank. And if the MAS is prevented from acting promptly to deal with such stress situation and such crisis, then it can be even more damaging for Singapore's reputation as a financial centre.

On the issue of minimum cash balances, again, this is the need to balance flexibility and transparency. Again, when we made the changes of an imposed requirement, this will be put up as a subsidiary legislation and which will be gazetted when we notify the banks.

On the asset maintenance requirements, Mr Inderjit Singh asked what were the practices in other countries. Let me assure him that asset maintenance is in fact one of the prudential tools which enhance the protection of depositors and this is a practice which is commonly done in other jurisdictions. Basically, if a branch of a foreign bank faces problems, we want to be able to circle some of the assets they have here so that its assets can be protected and to pay the local depositors. Other jurisdictions in fact go further and require the bank to incorporate locally before they can accept retail deposits. So, in fact, the regime that we have here is fairly liberal. We allow the foreign banks to set up branches here, but we do want to introduce this new asset maintenance regime in order to be able to protect our depositors.

The fifth area is the priority ranking of depositors and Mr Inderjit Singh asked whether, with such a situation, banks would game and go for a situation where the inter-bank deposits will rank higher. I think this is a possibility. But I am sure when banks undertake activities with their counter parties, they do not just take this as a key consideration. Before entering into any transaction, I am sure the principal consideration of the bank is the creditworthiness of its counter parties, and not the ranking of its inter-bank deposits.

The sixth area is the credit card regime. Mr Inderjit Singh welcomes the tightening of the rules. But at the same

time, he wonders whether we should have a single entity to regulate all the credit. I think we do want to prevent Singaporeans getting themselves into situations where, as Mr Inderjit Singh mentioned, they borrow money to pay earlier credit problems or loans and, as a result, they end up spiralling into a situation where it is very difficult for them to get out. At the same time, we cannot be overly stringent. If we cut off the limits on credit card applications too stringently and we prevent avenues for lower-income Singaporeans to borrow through, say, for example, the Moneylenders Act, then they have nowhere to go and they will probably end up with the loansharks. So this is where we have to strike a balance. Indeed, this is what we have done between the Ministry of Law which oversees the Moneylenders Act and MAS which oversees the Banking Act. You have noticed in recent months that we have coordinated the policies so that we have a consistent regulatory framework with regard to credit borrowing from Singaporeans.

Let me now turn to the four issues raised by Mdm Ho Geok Choo. The first issue is on SME financing and her suggestion of a SME bank. I think we have addressed this just now in a Question for Oral Answer. We have quite a wide range of avenues for SMEs to have access to financing, whether through trade financing, term loans, factoring, or through Government assistance, LEFS scheme and many other schemes, which I mentioned just now. We will continue to evolve and provide more opportunities. Right now, many banks in fact regard SME financing as an area of growth that they will be focusing on. I know of many banks who see that by developing the SME sector in Singapore as a template for which they can bring the business model to the regional countries and it is a way of expanding their business. So it is not true that the banks see the SME as a sector

for which there are no good business prospects.

MAS will continue to welcome initiatives by the financial institutions to provide new financing options for the SMEs. For example, we have seen some initiatives put up to allow the SMEs to tap the capital markets and also to assess credit applications based on cashflow analysis, and not just simply on collateral. Let me also stress that MAS continues to be open to admitting financial institutions with specialised expertise in SME financing, so long as they are financially sound and meet our prudential standards. Some players in foreign markets who specialise in SME financing do not take deposits. In such instances, they will not require a banking licence from the MAS. There are a few of such players in Singapore already who are funded primarily in the capital market and which provides equipment leasing, factoring and other working capital loans to our SMEs.

Mdm Ho asked about the technology risks and whether our credit card technology can be updated to prevent fraud. On the whole issue of the appropriate technology to apply in credit cards, MAS' position is to leave it largely to the private sector. They are in the best position to decide for themselves. Let me tell the House that from the annual statistics that MAS has been collecting from the banks in Singapore on credit card fraud, in fact, credit card fraud losses have fallen significantly in the past few years. Between 2002 and 2005, credit card fraud losses have fallen by more than 50%, from $9.7 million to $4.5 million. So MAS does not see this as a very big problem. But, nevertheless, we will continue to monitor it and we will continue to encourage the credit card providers to adopt the right technology to prevent credit card fraud. They have to balance the likely losses from the fraud with the cost to be incurred in introducing new or very difficult technologies.

Mdm Ho also asked about the disclosure of product information. It is true that some of the banks are very aggressive in cross selling. For this, we have the Financial Advisers Act which regulates such cross selling and the market conduct of such cross selling. Under the Financial Advisers Act, all material information related to the product must be provided to the clients and such information disclosed must be clear, adequate and not false or misleading. So the rules are there and MAS will continue to enforce these rules. There are also similar rules, as I mentioned just now, on structured deposits which sometimes Singaporeans find difficulty in understanding the risks which they are undertaking in taking up these products.

Mdm Ho Geok Choo talked about advertisements on the Net. Basically, our approach to advertising on the Net for credit card is that if the advertising is targeted at Singaporeans, then it will come under the rules. I think that is the guiding principle.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang].

Bill considered in Committee.

The citation year "2006" will be changed to "2007", as indicated in the Order Paper Supplement.

Clauses 1 to 67 inclusive ordered to stand part of the Bill.

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

Order for Second Reading read.

4.16 pm

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

Sir, this Bill seeks to amend the Trade Marks Act to pave the way for Singapore to ratify the Singapore Treaty on the Law of Trademarks. That Treaty is the tangible outcome of a very successful diplomatic conference that the World Intellectual Property Organisation held in Singapore in March last year. The Treaty further harmonises trademark registration procedures and provides for electronic filing, making it more convenient for businesses to register and manage their trademarks globally.

For applicants filing trademarks in Singapore to gain from the benefits of the Treaty, we need to bring our domestic trademarks regime into full compliance with its provisions, and also for us to ratify the Treaty.

Provision for multiple-class system

Sir, our trademarks regime is already largely compliant with the provisions of the Treaty. But for full compliance, we need to amend the Trade Marks Act to enable IPOS to fully implement a "multiple-class" trademark registration system.

For trademark registration, goods and services are categorised into 45 classes as defined in the Third Schedule of the Trade Mark Rules. Currently, those wishing to register a trademark with IPOS in more than one class have to submit a separate application for each class. With a multiple-class system, they only need to submit one single application for all the applicable classes. This will make it more

convenient for trademark owners and their agents, as they will be able to manage their trademark registrations in appropriate bundles instead of handling each registration individually. For example, only one registration will be necessary for all classes of goods and services claimed for the same trademark. These bundles of registrations can be assigned, renewed or licensed as bundles as well.

To implement a multiple-class system, clause 3 of the Bill amends section 17 of the Trade Marks Act to allow the registration of a series of similar trademarks in two or more classes of goods or services. To complement a multiple-class system, clause 2 introduces a new section 5A to allow the division of a trademark application into two or more applications. This is because there may be times when an applicant may wish to divide up a multiple-class application into two or more applications. For example, the applicant may wish to register the trademarks for those classes that do not face opposition first, instead of holding the entire multiple-class application back.

Relief measures for procedural oversight

Sir, the Treaty also provides for relief measures to alleviate procedural mistakes by trademark applicants so that they do not lose the rights to the trademarks filed. This is because there may be instances when they miss certain time limits to respond to objections or queries from the Registrar of Trademarks and their trademark applications then become treated as withdrawn. There may also be instances when applicants may need more time to respond to the Registrar. To comply with the Treaty, clause 5 amends section 108 for rules to be made on extending time limits and for reinstating withdrawn trademark applications.

For consistency with the other rule-making provisions in the Act, clause 5 also removes the technical requirement

for the Minister to consult IPOS on rule changes since these are inevitably done in consultation with IPOS.

Other amendments: registration of licence of pending trademarks

Other than aligning our trademarks regime with the provisions of the Treaty, this Bill also seeks to provide businesses with greater flexibility in trademark management. Specifically, clause 4 amends section 41 to allow the registration of licences relating to pending trademarks and not just registered trademarks. This is to enable third parties to take note of the licensee’s interest in the trademark. It is useful even if the trademark is pending registration as some trademarks can quickly acquire goodwill and become highly desirable for licensing through franchising. This proposed amendment will enhance our business-friendliness and put Singapore on par with jurisdictions such as the UK and Australia.

To sum up, Sir, this Bill will bring about greater convenience to businesses as well as update our trademarks regime to be on par with international practices. It will also enable us to ratify and participate in the Singapore Treaty on the Law of Trademarks so that applicants filing trademarks in Singapore may benefit when the Treaty comes into operation. Consultations by IPOS indicate that the proposed changes have been welcomed by trademark applicants and supported by the trademark agents in Singapore.

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. - [Prof. S Jayakumar].

Bill considered in Committee.

The citation year "2006" will be changed to "2007", as indicated in the Order Paper Supplement.

Clauses 1 to 6 inclusive ordered to stand part of the Bill.

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

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.45 pm.

Sitting accordingly suspended

at 4.24 pm until 4.45 pm.

Sitting resumed at 4.45 pm

Order for Second Reading read.

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

Sir, as its title implies, this Bill collates a number of amendments to several Acts which are mainly technical in nature. Let me highlight the key ones.

Amendments to various Acts relating to record keeping requirements

The Prime Minister and Minister for Finance announced in the Annual Budget

Statement last year that a decision had been made to reduce the record-keeping period in a number of statutes, generally to five years with a view to reducing the burden and costs to businesses.

Pursuant to that statement, this Bill proposes amending 14 statutes to reduce to or specify a record-keeping period of five years. Amendments to the record-keeping period in a few more statutes will be made when those statutes are individually amended at a later time. With the exception of the Charities Act and the Income Tax Act, the amendments to the statutes covered under this Bill will apply to existing records to enable businesses to enjoy the benefits of the amendments as soon as they are brought into effect.

In the case of the Charities Act and Income Tax Act, the reduction in record-keeping period from seven years to five years under the Income Tax Act will take effect from year of assessment 2008 whilst that under the Charities Act will take effect from any financial year ending in 2007. These proposed effective dates for the Income Tax Act and Charities Act will give IRAS sufficient time to prepare for the transition and also give taxpayers and charities sufficient notice of the changes and the related transitional provisions.

Amendment to the Patents Act

Clause 6 makes several technical amendments to the Patents Act. Generally, these amendments will bring our patent system in line with two changes to the Regulations under the Patent Cooperation Treaty (or PCT) to which Singapore is a party.

The first is to provide an applicant with two more months after the statutory 12-month period to file his Singapore

patent application and claim priority over an earlier relevant application that he has filed in a Paris Convention or WTO member state, provided the applicant can show that he missed the initial 12-month period unintentionally, or despite showing due care. Amendments to section 17 of the Patents Act, with consequential amendments to section 87, are proposed to effect this.

The second is to allow an applicant to include the description and missing parts in his Singapore patent application by making reference to an earlier relevant application which completely contains them, assuming his Singapore patent application has claimed priority over this earlier relevant application. This allows the applicant to secure or retain the original date of filing of the application, and is important as a later date of filing could expose the application to additional prior art that would decrease the patentability of the invention. To effect this, amendments to section 26 of the Patents Act are proposed, along with consequential amendments to sections 2, 28, 29, 36A, 80 and 84.

Sir, these PCT-related amendments demonstrate our continuing commitment to keep our patent system in line with international developments. Public consultations show that the proposed changes are expected to be welcomed by both applicants and patent agents for the added flexibility they bring to the patent application process.

Apart from these PCT-related amendments, other technical amendments are also proposed to clarify provisions in the Patents Act concerning the requirement for English translation of foreign language patent applications, the publication status of PCT applications entering national phase in Singapore, and the entitlement of persons to act as patent agents.

Amendment to the Plant Varieties Protection Act

Clause 7 aligns section 52 of the Plant Varieties Protection Act with corresponding sections in the Trade Marks, Patents, and Registered Designs Acts regarding composition of offences.

Amendment of Boundaries and Survey Maps Act and amendment of Land Surveyors Act

Sir, the principal amendments to the Land Surveyors Act, or "LSA" for short, are to provide for the licensing of Limited Liability Partnerships (or "LLPs") formed by registered surveyors to supply or engage in survey services.

Presently, the LSA only has provisions to grant licences to corporations and partnerships to supply or engage in survey services. There are no provisions to grant licences to LLPs.

The LLP is a business structure which is especially suitable for professional firms. The amendments will allow registered surveyors to form such business entities. This is a pro-business approach. Similar amendments have been made to the Professional Engineers Act and Architects Act to allow for LLPs.

The other amendments to the LSA are technical and minor in nature, whilst the amendments to the Boundaries and Survey Maps Act are consequential to the proposed amendments to the LSA to provide for LLPs.

Amendments to Schedule A of the Criminal Procedure Code

Sir, Schedule A of the Criminal Procedure Code (CPC) lists out Penal Code offences and provides whether the Police may arrest without a warrant and whether bail is available as of right. The amendments rectify the anomaly where sections 130B, 130C and 151A of the

Penal Code have been omitted from the Schedule. Section 130B concerns piracy on the high seas, section 130C concerns piractical acts and section 151A concerns the making, printing or distributing of any document that incites violence or counsels disobedience to a lawful order of a public servant or is likely to lead to a breach of the peace. These are all serious offences. Other offences similar in nature and gravity are likewise also "seizable" offences. With these amendments, Police will be able to arrest offenders of sections 130B, 130C and 151A in the Penal Code without a warrant. These three offences will not be compoundable, and the offenders will not be entitled to bail as of right, but at the discretion of the court.

Amendment to the Immigration Act

Sir, the Immigration Act currently allows ICA to require the furnishing of security from the master, owner, charterer or agent of any vessel, aircraft or train arriving in Singapore, if ICA has reasonable grounds to believe that any person arriving on board, such as a member of the crew, a passenger, or a stowaway, may attempt to disembark in or enter Singapore illegally. The purpose of this security bond is to cover the cost of the maintenance and repatriation of the person if he is subsequently stranded in Singapore. The bond will only be enforced if any of its conditions is breached in contravention of the Immigration Act and its regulations.

Currently, the Act requires the security in such cases to be furnished by way of a bond, or a bond accompanied by a guarantee from the bank or insurer. The Act also requires the form of the bond and the guarantee to be stipulated. This restricts the types of security and the form of the bond and guarantee which ICA can accept. In addition, it limits the selection of the acceptable types of security which are available to the shipping community. Hence, clause 10

seeks to amend section 43(4) of the Act to vest powers in the Controller of Immigration to determine the manner and form of security required, so as to allow flexibility on the type or types of security which may be accepted.

Amendment to the Public Transport Council Act

Clause 13 makes a technical amendment to the definition of "ticket payment service" in the Public Transport Council Act to clarify that the service relates to "mode of payment for tickets" instead of "tickets". This reflects accurately the intention for the PTC to regulate a service provider who provides a service which relates to any "mode of payment for tickets". An example of a "mode of payment for tickets" is the ez-link card. The amendment does not expand the scope of the definition but merely serves to clarify it.

Amendment to the Public Utilities Act

Sir, clause 14 amends paragraph 1 of the Third Schedule to the Public Utilities Act to change the financial year of the PUB. Currently, based on the calendar year, it will be changed to start from 1st April and end on 31st March the following year. Consumers and suppliers will not be affected by this change.

Amendments to the Road Traffic Act

The proposed amendment to section 44(1) of the Road Traffic Act will remove the current stipulation in section 44(1) that the Deputy Commissioner of Police may keep a driver's conviction or disqualification record for a period not exceeding three years. At present, a certificate relating to the particulars of any conviction or disqualification maintained under section 44(1) is prima facie evidence of the conviction or

disqualification, by virtue of section 44(2). The proposed amendment will allow a certificate relating to the particulars of any conviction or disqualification, recorded and maintained under section 44(1), to be prima facie evidence of the conviction or disqualification under section 44(2), when the conviction or disqualification occurred more than three years previously.

Amendment to Supreme Court of Judicature Act and Subordinate Courts Act as a consequence of the five-day work week

Sir, clauses 16 and 17 amend the Subordinate Courts Act and the Supreme Court of Judicature Act to reflect the days on which the Supreme Court and Subordinate Courts and their respective Registries must be open, following the introduction of the five-day work week in the civil service in 2004. However, notwithstanding the amendments, the Supreme Court and Subordinate Court Registries will continue to function on Saturdays. At the Subordinate Courts - Mentions Court 26, Family Court 1 and the Juvenile Court will also continue to remain open on Saturdays so that arrested persons may be produced before a Magistrate before the expiry of the 48 hour maximum detention period stipulated in section 36 of the Criminal Procedure Code. The amendments will also not change the position that a Supreme Court Judge or a judicial officer of the Subordinate Courts may lawfully sit on a Saturday, Sunday or a public holiday if in the opinion of the Judge or judicial officer, the business to be dispatched is extremely urgent.

Amendment to section 139 of the Women's Charter

Sir, under section 139 of the Women's Charter, the power to make rules to fix the fees and costs payable for matrimonial proceedings as well as the

rules concerning the practice and procedure for matrimonial proceedings is vested in the Chief Justice and two other Judges of the Supreme Court. The Chief Justice is of the view that the judges of the Family Court ought to be formally involved in the making of rules governing matrimonial proceedings and that the rules should be relevant to the lay person. Clause 18 amends section 139 of the Women’s Charter to provide that the rules committee will comprise the Chief Justice, a Judge of the Supreme Court and a District Judge appointed by the Chief Justice and two practising lawyers appointed by the Chief Justice.

Other amendments

Sir, lastly, the Bill corrects a grammatical error in section 2(2) of the Parliamentary Elections Act.

Sir, I beg to move.

Question proposed.

Mr Deputy Speaker, Sir, I have some queries for the Senior Minister of State concerning the rationale for the reduction of the record-keeping period which is dealt with in clauses 2 to 4 and also in the Schedule of the Bill.

Sir, if I recall correctly, in October 2005, this issue actually came up before Parliament in the context of the Income Tax (Amendment) Bill. At that time, the House was told that IRAS needed to keep records for seven years and one of the reasons was that the Limitation Act still provided a six-year time bar for actions and IRAS needed that allowance for some actions where they have to recover back taxes.

Sir, as far as I know, the time bar under the Limitation Act still remains the same at six years for most civil actions. My question is whether this reduction in record-keeping to five years would risk

destruction of relevant records which might be needed for court actions.

To my knowledge, this amendment has been considered by the relevant agencies such as the Ministry of Finance which includes, of course, IRAS. They have all agreed that the five-year period is something we can move towards. I stand corrected, but it should not affect any substantive rights that would have accrued because these are technical amendments, and they only relate to the period of time in which the parties are required to keep the records.

Question put, and agreed to.

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

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

Bill considered in Committee.

[Mr Deputy Speaker in the Chair ]

The citation year "2006" will be changed to "2007", as indicated in the Order Paper Supplement.

Clauses 1 to 18 ordered to stand part of the Bill.

The Schedule ordered to stand part of the Bill.

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

5.00 pm

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

Introduction

Sir, although the intent of this Secondhand Goods Dealers Bill to provide for the licensing and control of secondhand goods dealers remains the same as the current Secondhand Dealers Act (SHDA), MHA is proposing to enact a new Bill because most of the sections in the current Act have been amended.

The Secondhand Dealers Act was enacted in 1918 to regulate businesses that deal in the trading of secondhand goods. That is almost 100 years ago. This is because businesses that deal with secondhand goods trading have the potential to be a channel for criminals to dispose of stolen goods - or what is known as fencing. Hence, the need to regulate the secondhand goods trading industry.

The Act has been useful in solving some crimes. Members will know that, in recent years, handphone theft nearly tripled from 1,700 cases in 2001 to more than 4,800 cases in 2005 before falling to about 4,600 cases last year. Police's regulatory control of secondhand dealers, as well as other enforcement measures, has contributed to this improving trend. Apart from intensifying checks on dealers of secondhand handphones, Police compared the leads from cases of handphone theft against the transaction records of dealers. These efforts have improved our success rate in crime solving and this, in turn, has had a deterrent effect on thieves and errant secondhand handphone dealers. Clearly, the Act has been useful in helping Police deal with errant dealers who are responsible for the quick and easy disposition of stolen handphones.

While the intent of the Act remains the same, the crime situation has changed

considerably over the years. This Bill before the House reflects a refinement of the existing Act to better serve today’s regulatory and investigative requirements. It also seeks to bring it up to date with Police’s current enforcement needs.

Sharper regulatory focus

Mr Speaker, Sir, the new Act will sharpen the focus of the regulatory regime for secondhand goods dealers. We assess that there is no need to subject all secondhand goods dealers to regulatory requirements, such as yearly registration and payment of fees, especially if the items they deal in are of little crime control value.

Hence, whereas the Schedule of the current Act contains a list of goods that are excluded from regulation under the SHDA, that is, a “negative list” approach, the new Act will take a “positive list” approach, that is to say, the new definition of secondhand “goods” in clause 2 of the Bill will cover only items that have considerable value and which have been identified to be common items of theft and easily disposed of to secondhand goods dealers by property offenders. To ensure that we can adjust quickly to changing crime trends, the Minister will have powers to amend this “positive list” by order in the Gazette.

This “positive list” approach in regulation will benefit dealers in secondhand goods that are not in the Schedule. Such an approach is also more pro-business.

But let me assure the House that, with this loosening of control over the industry, Police will still exercise regulatory control over dealers in secondhand goods which are of interest to the Police. Enforcement checks will continue to ensure that errant dealers are dealt with accordingly under the SHDA.

Expansion of scope

Sir, the second major enhancement to the current regime involves extending the definition of “shop” beyond physical shop premises, to include any place of business, whether a physical place or a virtual one like the Internet. The current Act does not cover dealers operating without a shop. We recognise that many secondhand goods dealers today actually carry on their business via other means, such as on the Internet, or in an open-air setting like Sungei Road. This is unacceptable, as thieves and robbers will simply get rid of their loot through these other dealers who do not have a shop-front.

MHA is hence widening the coverage of the law to include those dealers who do not operate within a shop. However, in keeping with the emphasis on a sharper regulatory focus, only dealers who trade in secondhand goods that are listed in the Schedule will come under the ambit of the Act.

Record-Keeping

Another important aspect of this Bill lies in clause 10, which requires selected dealers to keep transaction records and to submit these to the Police. Such records are valuable in facilitating Police’s work in crime control and investigation. Secondhand goods dealers are also required by law to retain the records for a period of not less than five years and to produce such records for examination by any Magistrate, Justice of the Peace, Licensing Officer or police officer.

Consolidate and update penalties

As the Act has not been amended for some time, the penalties in the SHDA are generally light in today’s context. Apart from the penalty of an imprisonment term of up to three years for dealers in used bicycles or bicycle parts, motor vehicles

or motor vehicle parts, for failing to keep proper books of accounts, all other offences carry only a penalty of a fine of up to $1,000, and an imprisonment term of up to six months. These penalties are insufficient in today’s context as revenues of dealers’ trade are considerably higher. The law will then lose its impact, if it poses little deterrence.

Using the Pawnbrokers Act as a benchmark as the two Acts are similar in intent and purpose, MHA is consolidating all the penalties in clause 18 of the Bill, which imposes a stiffer general penalty of a fine not exceeding $20,000 or imprisonment for a term not exceeding 12 months, or both, to any person convicted of an offence under the proposed Act or its Rules. As this is only the maximum amount of the fine, the court will have greater leeway to impose the appropriate punishment in any particular case.

Composition of offences

Clauses 18 and 19 give Police more powers in bringing errant dealers to task. But, as not every case is serious enough to be prosecuted in court, the new Act will empower the Licensing Officer to compound any such offence prescribed as compoundable by the Minister, with a composition fine not exceeding $2,000. This is in line with the process Ministry of Law started two years ago to make some offences, where appropriate, compoundable.

Conclusion

Mr Speaker Sir, enacting this Bill will mean that, for a start, more than 900 existing dealers would no longer be licensed under the Act, as they are not currently dealing in goods in the Schedule or the “positive list”. This is in line with the policy to reduce regulatory controls on businesses. Police will focus their control over secondhand goods dealers who trade in high-end or profitable secondhand goods, using the new “positive list”.

Sir, in conclusion, the Government, through this new Act, is taking another important step to help ensure that our legislation keeps pace with evolving trends so that we can keep crime under control whilst allowing businesses as much room to operate as possible.

Sir, I beg to move.

Question proposed.

5.10 pm

Mr Deputy Speaker, Sir, I rise in support of the Bill. The proposed Bill will provide a comprehensive legislative framework to regulate the trading of secondhand goods in Singapore, and prevent the sale of stolen goods through secondhand dealers. Sir, the rise in prices of consumer goods and the promotion of reuse or recycling of consumer goods for environmental protection reasons have created a market for secondhand goods in Singapore. This is especially so for secondhand goods such as precious metals, jewellery, computers, electronic devices, and antiques.

This growth in the secondhand goods market has at the same time also provided a convenient channel for stolen goods to be traded in secondhand goods shops or through the Internet. Thus, it is indeed timely to update the current Secondhand Dealers Act which was enacted in 1918 and to take into consideration the new range of secondhand goods, the avenues where secondhand goods are transacted, and the prevention of stolen goods being transacted in the secondhand goods market.

Sir, the proposed Bill has placed stringent measures to regulate secondhand goods dealers in terms of licensing, keeping proper records, facilitating Police

investigation, and penalty regime. But there are certain shortcomings in the Bill with regard to the impact of the Bill on cost of business, control of secondhand goods shops, keeping of proper records, retention of secondhand goods , unfair practices, and protection of consumers purchasing secondhand goods.

Cost of business and secondhand goods dealers

Sir, the proposed Bill will increase the business cost of secondhand goods dealers as there will be licensing fee, licence renewal fee, transfer fee, and cost of keeping proper records for five years. In addition, dealers are bound by the Act to provide information at their expense to facilitate Police investigation. Sir, I wish to ask the following clarifications from the Minister: (i) how much is the licensing fee as compared to the present fee; (ii) is the licence fee applicable for one shop outlet or multiple shop outlets for the same firm; (iii) what is the period of the licence; (iv) how much are the renewal and transfer fees; and (v) whether there are procedures and prescribed forms to ensure the standardisation of keeping proper records in English such as a master register of secondhand goods in possession, and those transacted stating the time at which and the person from whom he purchased or received such goods, including their particulars?

Sir, I propose that the Bill provide a standard procedure and the use of prescribed forms so as to ensure compliance, reduce business cost and facilitate Police investigation.

Control of secondhand goods shops

Sir, licensing will ensure proper control of the secondhand goods dealers and the secondhand goods market. To further facilitate the enforcement of licensed dealers, I propose that we should include a clause highlighting the need for

secondhand goods dealers to display their licences in a conspicuous place in their shops or sale outlets. These signages should also be of a certain size and type as prescribed by the licensing authority displaying such words as "Licensed dealer in secondhand goods". The display of licence and signage will also protect consumers who wish to purchase secondhand goods from authorised secondhand dealers.

The growth in Internet transactions, both locally and overseas, has made it challenging to control the sale of secondhand goods on the Net. I would like to clarify with the Minister as to how this proposed Act will regulate Internet sale of secondhand goods, especially for auction websites, where not much information of both sellers and buyers are needed for the transactions. Such Internet transactions may provide the loopholes where stolen goods can be channelled for disposal.

Sir, I wish to seek clarifications from the Minister as to whether licences are required for individual stall operators of flea market, trade fairs and ad hoc car boot sale operators, including community-based organisations.

Keeping of proper records

Sir, the keeping of proper records is a costly process but a necessity for control purposes. In Singapore, many secondhand goods dealers are small and medium enterprises. Many do not have the resources to modernise their operations, such as using information technology to keep track of transactions and inventory control. Thus, the requirements of the Bill to keep five years proper records will have significant impact on these businesses making it difficult for them to comply.

Sir, I would propose that the Ministry spell out clearly the format and information required in keeping proper

records for the purpose of crime prevention and investigation so that secondhand goods dealers can comply without undue financial commitments. In addition, the Ministry should also take this opportunity to encourage secondhand dealers to upgrade and computerise their operations and provide appropriate Government grant through SPRING Singapore to support these SMEs. The upgrading of business practices of secondhand goods dealers will also benefit the Police Force in its crime prevention efforts.

Retention of secondhand goods

To deter the transaction of stolen goods and ensure recovery of such goods, it is necessary for the Act to specify the retention of certain specified secondhand goods, especially those which can be disposed of easily, for a certain period such as one month. There should be provisions in the Act to require licensed dealers who acquire secondhand goods other than from another licensed dealer to retain such goods in possession for a minimum period before reselling them or making modifications to the goods. This will provide more time for Police to effectively investigate and recover stolen goods. In this aspect, may I ask the Minister how effective is the Police in helping people to recover stolen property? If the recovery rate is low, we should put in place more measures in the Act to facilitate the recovery of stolen goods.

Unfair practices

Sir, clause 11 of the Bill requires the secondhand goods dealers to provide information of stolen goods or lost secondhand goods to the Police upon notification. Failure to do so is an offence under the Act. This requirement is indeed very onerous on the dealers, especially when they have to deal with thousands of secondhand goods transactions and

stocks, especially for small items such as handphones or electronic devices.

In practice, it may be difficult for the dealers to provide the required information on time to facilitate Police investigation or it will cost the business a lot to comply with every Police's request under clause 11. This practice, if frequently implemented, will be unfair to the dealers as their business operations will be adversely affected. I would propose that this clause be implemented with caution, and should only apply in situations where there is sufficient evidence that dubious dealers are deliberately concealing information on secondhand goods.

Sir, instead of penalising dealers for not collaborating, I would urge the Ministry to consider incentivising dealers who furnish information resulting in the solving of crimes. These good efforts by the dealers can be appropriately rewarded or recognised when renewing their licences. In this way, we can further encourage partnership between the Police and secondhand dealers in crime prevention and increase the chances of recovery for stolen goods.

Protection of consumers purchasing secondhand goods