Hansard, 2010-11-22

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 (2010) To (2010/2011) Mr Tharman Shanmugaratnam 22 Oct 24 Oct 05 Nov 06 Nov 11 Nov 13 Nov Dr Vivian Balakrishnan 23 Oct 25 Oct 09 Nov 10 Nov Mr Low Thia Khiang 25 Oct 31 Oct Mr Teo Ser Luck 28 Oct 02 Nov 20 Nov 21 Nov 23 Nov 26 Nov 30 Nov 03 Dec RAdm [NS] Lui Tuck Yew 29 Oct 01 Nov 11 Nov 13 Nov 02 Dec 05 Dec 15 Dec 31 Dec Mr Sam Tan Chin Siong 29 Oct 02 Nov Dr Ahmad Mohd Magad 31 Oct 03 Nov Mr Liang Eng Hwa 31 Oct 06 Nov 16 Nov 18 Nov Mr Matthias Yao Chih 31 Oct 04 Nov 18 Nov 21 Nov Mr K Shanmugam 02 Nov 09 Nov Prof. S Jayakumar 03 Nov 09 Nov Mr Seah Kian Peng 03 Nov 05 Nov 09 Nov 10 Nov Mrs Yu-Foo Yee Shoon 03 Nov 06 Nov 23 Nov 26 Nov Assoc. Prof. Koo Tsai Kee 04 Nov 07 Nov 09 Nov 11 Nov Mr Lim Swee Say 04 Nov 06 Nov 13 Dec 23 Dec Dr Teo Ho Pin 04 Nov 10 Nov Mr Baey Yam Keng 05 Nov 07 Nov Mr George Yong-Boon Yeo 05 Nov 08 Nov 09 Nov 12 Nov 29 Nov 03 Dec Column: 1449 Ms Jessica Tan Soon Neo 06 Nov 11 Nov 22 Nov 27 Nov Mdm Halimah Yacob 08 Nov 15 Nov 30 Nov 04 Dec Mr Lim Hng Kiang 09 Nov 11 Nov 22 Nov 25 Nov Mr Yeo Guat Kwang 09 Nov 10 Nov 21 Nov 27 Nov Mr Lee Hsien Loong 11 Nov 14 Nov 24 Dec 31 Dec Mdm Cynthia Phua 12 Nov 15 Nov 03 Dec 05 Dec Mr Gan Kim Yong 12 Nov 14 Nov Mr Khaw Boon Wan 12 Nov 14 Nov 19 Nov 21 Nov Assoc. Prof. Dr Muhammad Faishal Ibrahim 12 Nov 14 Nov Mr Teo Chee Hean 12 Nov 15 Nov 19 Nov 23 Nov 03 Dec 05 Dec 08 Dec 10 Dec 26 Dec 31 Dec Mr Ang Mong Seng 15 Nov 18 Nov Er Lee Bee Wah 15 Nov 21 Nov 30 Nov 03 Dec 10 Dec 23 Dec 26 Dec 29 Dec Mr Sin Boon Ann 15 Nov 17 Nov Dr Ng Eng Hen 16 Nov 20 Nov Mr Cedric Foo Chee Keng 17 Nov 20 Nov Ms Grace Fu Hai Yien 17 Nov 21 Nov 04 Dec 06 Dec Dr Lee Boon Yang 18 Nov 24 Nov 27 Nov 07 Dec Dr Lily Neo 18 Nov 23 Nov Mr Terry Lee 18 Nov 24 Nov Mr Lee Yi Shyan 20 Nov 28 Nov Ms Irene Ng Phek Hoong 21 Nov 25 Nov 02 Dec 05 Dec 23 Dec 02 Jan Dr Lim Wee Kiak 21 Nov 25 Nov 23 Dec 30 Dec Mr Mah Bow Tan 21 Nov 25 Nov 07 Dec 18 Dec Column: 1450 Mr Zainul Abidin Rasheed 22 Nov 25 Nov 04 Dec 13 Dec 14 Dec 17 Dec Mr Charles Chong 23 Nov 24 Nov Ms Sylvia Lim 24 Nov 24 Nov Mr Yeo Cheow Tong 24 Nov 26 Nov Mr Michael Palmer 29 Nov 04 Dec Mr Raymond Lim Siang Keat 01 Dec 01 Dec 10 Dec 26 Dec Mr Heng Chee How 06 Dec 11 Dec Mr Lim Biow Chuan 06 Dec 10 Dec Mrs Lim Hwee Hua 06 Dec 16 Dec Mr Masagos Zulkifli B M M 08 Dec 11 Dec 14 Dec 24 Dec Mr Wee Siew Kim 08 Dec 11 Dec 13 Dec 14 Dec 23 Dec 29 Dec Mr Wong Kan Seng 20 Dec 28 Dec Mr Abdullah Tarmugi 21 Dec 25 Dec

ABDULLAH TARMUGI Speaker Parliament of Singapore

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

15th November,2010 (1) Income Tax (Amendment) Bill (2) Stamp Duties (Amendment No. 2) Bill (3) Supreme Court of Judicature (Amendment) Bill (4) Subordinate Courts (Amendment) Bill ABDULLAH TARMUGI Speaker Parliament of Singapore

[Mr Speaker in the Chair]

1. Mdm Ho Geok Choo asked the Minister for the Environment and Water Resources in light of the recent haze situation (a) what help has Singapore offered Indonesia in battling the fires; (b) whether Singapore with other ASEAN member states will push Indonesia to ratify the 2002 ASEAN Agreement on Transboundary Haze Pollution; and (c) how can the expectations of Singaporeans on air quality and the environment be managed.

2. Er Lee Bee Wah asked the Minister for the Environment and Water Resources with the arrival of the transboundary haze (a) what is the Ministry doing to engage the neighbouring countries on managing the hot spots; (b) what is the long-term solution that is being mapped out with neighbouring countries; (c) how has the haze affected the health of older Singaporeans; and (d) how has the haze impacted on our economy, in particular tourist arrivals.

Mr Speaker, Sir, may I have your permission to take Question Nos. 1 to 2 together?

Yes.

Sir, the transboundary haze creates health problems for our citizens and has wide-spread implications on our economy, tourism and the transportation/aviation industry. The elderly, especially those with asthma or a pre-existing heart or lung disease, may suffer from chest discomfort or breathing problems such as shortness of breath, coughing or wheezing. Prolonged periods of haze also

lead to economic losses for Singapore. The losses are from a rise in hospitalisation and treatment costs, losses in tourism, losses in productivity because people take time off from work and losses in recreational opportunities.

As the period of haze was short this year, any impact on our industries, including tourism, would have been minimal. However, if the haze were prolonged, there would have been adverse impact on economic activities and health, as was seen in the 2006 haze episode.

Sir, we thus take a serious view of the haze situation. To minimise the adverse impacts of smoke haze on Singaporeans, an Inter-agency Haze Task Force (HTF) has been established since 1994 to co-ordinate the national action plans to mitigate the impact of haze and put in place measures to inform the public during a smoke haze episode. For example, hourly updates of the three-hour Pollutant Standards Index (PSI) and the relevant health advisory are given when the haze worsens. When the PSI reaches the unhealthy range, which is above 100, a dedicated hotline will be set up to answer any queries from the public. When the PSI exceeds 150, the public will be advised to use face masks. When the reading reaches the hazardous range, which is above 200, the HTF will consider stoppage of outdoor activities and closure of schools.

Since the 2006 haze episode, Singapore has actively promoted regional and international efforts to address the haze problem. That year, Singapore initiated the Sub-regional Ministerial Steering Committee (MSC) on Transboundary Haze Pollution comprising Brunei, Indonesia, Malaysia, Singapore and Thailand to enhance haze collaboration in the southern ASEAN region. The MSC has met 10 times since then. One of its objectives is to assist Indonesia in implementing its Plan of Action (PoA) to

combat haze. The MSC closely monitors the hotspot situation in the region. The MSC has organised forums that raise awareness among international organisations, non-governmental organisations and the private sector on the need to share expertise and offer resources in addressing land and forest fires.

On the bilateral front, our collaboration in Jambi province has progressed well. Eight action programmes, covering initiatives ranging from haze monitoring and assessment to fire fighting and suppression capabilities as well as capacity building on sustainable land-farming practices, have been completed since 2007. Thus far, we note that the number of hotspots have been low in Jambi Province and, in particular, Muaro-Jambi Regency, relative to other fire-prone provinces and districts in Indonesia. Singapore’s initiatives are being implemented in these areas.

We are thus heartened that our efforts over the last few years have contributed towards addressing the haze challenges in Indonesia. We believe it is important to replicate the good experiences gained from the Indonesia-Singapore collaboration in the Jambi province. This could be achieved by continuing to organise forums that can help facilitate exchange of experience and best practices between local governments from the fire-prone provinces as well as with regional NGOs, international organisations and think tanks.

On 13th October this year, I attended the 6th Meeting of the Conference of the Parties to the ASEAN Agreement on Transboundary Haze Pollution, which was held to review the national, sub-regional and regional activities to address land and forest fires in the region. We cautioned environment ministers present that periods of dry conditions may occur, and

urged ASEAN member states to remain vigilant and to continuously monitor as well as implement haze prevention activities.

Together with the other environment ministers, Singapore also urged Indonesia to ratify the ASEAN Agreement on Transboundary Haze Pollution. With Indonesia remaining the only ASEAN country yet to ratify this Agreement, we will continue with our ASEAN neighbours to call on Indonesia to consider doing so expeditiously.

When Malaysia and Singapore were struck by haze on 19th October, I wrote immediately and followed up with a call to Indonesia’s State Minister of Environment Professor Gusti Muhammad Hatta to register our concerns on the worsening haze situation. I was assured that Indonesia had sent a team of officers to the areas affected by land and forest fires to coordinate the fire-fighting efforts on the ground. I also reiterated our offer of assistance to augment Indonesia’s fire-fighting efforts if needed. On 24th October, the air quality was back in the good range again as the fires subsided in Sumatra. Indonesia has therefore made commendable efforts to prevent the regional haze situation from worsening this year.

Singapore is currently chair of the MSC for two years until 2012. We will use our chairmanship to work more closely with our regional neighbours to put in place more measures to prevent potential land and forest fires. This will avert the need for huge resources required by affected countries to tackle the problems after transboundary haze occurs.

Thank you, Mr Speaker, Sir. We are lucky that for this round, haze visited Singapore for a very short period. I have two supplementary questions for the Minister.

In view of the constant remark by Indonesian politicians that we should be grateful for the oxygen provided rather than complain about the haze problems, does the Minister think that Indonesia has the political will to solve the haze problem? Question two: despite the various reminders, telephone calls, cautionary notes that Minister gives to his counterpart, does he think that these have been effective? As what we can see – and if I may describe their attitude by using a Malay proverb – bagai mencurah air di daun keladi. Literally translated, it means "pouring water on yam leaves" which is to say it is of no use.

Sir, as to whether or not they have the political will to solve the problem is not something for me to answer. We know for a fact that the Indonesian government has a clear plan of action to cut back the forest fires in 35 fire-prone provinces across Indonesia over the next five years. As I have mentioned in my reply, what we want to do in the ASEAN region is to work with Indonesia to help them to implement those programmes. In fact, they have called for assistance across the ASEAN countries in order to implement the plan of action. As to whether it is being executed on the ground, this is a matter which we have to ask our Indonesian colleagues to clarify.

Our relationship with the Indonesian government in relation to our joint project in Jambi has been a good one. We have close collaboration not only with the central authorities but also with the provincial authorities. As I mentioned in my reply, that has helped to reduced the hot spots in the Muaro-Jambi Regency. So it shows that they have a plan of action and there is collaboration with the regional countries. It shows that it can be done and we can solve the problem together.

As to whether the reminders have been effective, I suppose the answer is

that we will continue to remind them that they have an obligation to the rest of the countries in the region to do their part. So I cannot tell the Member anything else, other than the fact that I will continue to remind my colleagues in the region when we meet again in Singapore next year for the 11th MSC Meeting to inform that this is a concern for all of us and that they should do something about it.

Thank you, Sir. I have three supplementary questions. One is: has Singapore considered cloud-seeding as a solution to the haze problem and, if it has, would it offer the same expertise to Indonesia?

Secondly, during the haze Singaporeans tended to stay indoors, shut their windows and for better ventilation, Singaporeans would switch on fans and air-conditioners. I wonder whether a study has been undertaken to ascertain whether there is a spike in electricity bills during the haze situation? Will the Government consider giving electricity rebates to cope with higher electricity bills when the haze prevails in Singapore?

Thirdly, what legal rights do average Singaporeans have against transboundary pollution like the haze situation?

Sir, to answer the last question first: as neighbours in the region, we have a right and that is why there is an agreement – the Transboundary Haze Pollution Agreement – which all the nine countries of ASEAN except Indonesia have signed and ratified. If Indonesia were to ratify the haze agreement, which has already come into force, it can be fully implemented and therefore, we can monitor the situation.

Cloud-seeding is normally used whenever you want to have rain. In this particular instance, of course, if there is rain it would help in terms of easing the haze.

We have done our internal studies and have found that cloud-seeding is not very effective even for rain-making purposes in Singapore.

As for electricity bills, we have not really monitored it. And as for the rebates, I think the Member knows the answer – it is a flat "no" [Laughter]. The most important thing is that Singaporeans must continue to prepare for this eventuality and make the necessary adjustments.

Er Lee, last question.

Thank you, Mr Speaker. I would like to ask the Minister this: can we bring this issue to international organisations like the World Health Organization (WHO) because any prolonged haze will affect many Singaporeans' health?

Perhaps the Member can ask the Minister for Foreign Affairs when he answers the third question after this. The MSC Forum was first organised in Singapore in 2009 and we are going to continue with the MSC Forum. The advantage of the MSC Forum is that it is open to the international organisations, the NGOs and the think tanks. This will allow international organisations that have an interest to come into the region and work together with the regional partners. So, I think that is a very good platform for us to share best practices, clarify the matter to the international community so that help can be made available in tackling this problem.

3. Mr Michael Palmer asked the Minister for Foreign Affairs what steps the Ministry intends to take to obtain a

binding and enforceable commitment from Indonesia for the reduction and ultimate eradication of the haze caused by the rampant burning of the forests in Indonesia.

As we heard from Minister Yaacob, last month, Singapore was again seriously affected by smoke haze from forest and peatland fires in Sumatra. There was a day when the Pollutant Standards Index hit the "unhealthy" range. The haze affected not only people in Singapore and Malaysia. It affected most of the people in Indonesia who lived closest to the fires. The haze is therefore a matter of very serious concern to us, to the Indonesians and to the entire region.

On 21st October, Minister Yaacob called his Indonesian counterpart, Pak Gusti, to convey Singapore’s concerns over the haze and to offer our assistance to combat the forest fires. I spoke to Foreign Minister Marty Natalegawa the following morning to reiterate our concerns and our immediate readiness to assist Indonesia. Pak Marty told me that he was also concerned about the situation and assured me that the Indonesian authorities were trying to address the problem. And he stressed the importance of regional cooperation and how it had helped in the past.

The problem is over for this year, in part helped by the wet weather. When I was in Hanoi for the ASEAN Summit and other related meetings, I thanked Pak Marty for Indonesia's cooperation.

Given that the haze does not respect boundaries, it is imperative that regional countries continue to work closely together on this issue. Singapore and Malaysia have been collaborating with the provincial governments of Jambi and Riau respectively on various fire and haze prevention programmes. The Sub-Regional

Ministerial Steering Committee (MSC) on Transboundary Haze Pollution also meets regularly. These efforts have helped to mitigate the haze problem in the last three years. But our experience this year shows that more needs to be done.

The problems faced by the region from the haze led to an ASEAN Agreement on Transboundary Haze Pollution. The Indonesian government signed this Agreement in the year 2002 but, unfortunately, has yet to ratify it. It has to be ratified by the Indonesian House of Representatives (DPR). Although the executive branch of the Indonesian government considers the Agreement important, some members of the DPR have objected to it on the grounds that Indonesia does not benefit sufficiently from this Agreement. It is hard to understand this argument. To begin with, Indonesians living in Sumatra and Kalimantan who are badly affected by the smoke haze will benefit most from the Agreement. We need Indonesia to take the lead on this issue when it takes over the ASEAN Chairmanship next year.

The haze is not only a local or regional issue. It has a global dimension as well. The reduction of emissions from deforestation and forest degradation is an important element of ongoing climate change negotiations under the Bali Action Plan called REDD Plus – REDD standing for Reducing Emissions from Deforestation and Forest Degradation, and Plus referring to the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.

Indonesia is an active participant in REDD Plus. The donor countries of this initiative have pledged substantial amounts of money, both multilaterally and bilaterally, to help forest nations reduce deforestation. An example of this is the US$1 billion bilateral agreement between Norway and Indonesia. This bilateral agreement requires very close monitoring, reporting and verification

to ensure that the objectives of REDD Plus are met. At the broader level, Indonesia has also announced a voluntary carbon emissions reduction target of 26% by 2020, and up to 41% with international support. These emissions reductions are slated to come, in large part, from the forestry sector. Such efforts by Indonesia to reduce its emissions from deforestation will also help to reduce unsustainable land clearing practices which cause the haze.

For these reasons, we hope to see Indonesia ratify the ASEAN Agreement on Transboundary Haze Pollution soon as it benefits Indonesia, ASEAN and the wider world.

I thank the Minister for his thorough reply. Thus far, the action on Indonesia's part seems to one of putting out the fires rather than preventing them. Do we know what are their plans to prevent the fires and to penalise the perpetrators who caused the fires? Also, is this delay in ratifying the Transboundary Haze Pollution Agreement a sign of their seriousness? Perhaps we can convey to them that they should try harder to ratify this.

We will of course try hard to encourage them to do what is possible. It is not as if they do not have the plans: they have the plans. In previous years, they have made quite big efforts. In fact, just two days ago, I gave breakfast to GOLKAR Chairman Aburizal Bakrie. Pak Bakrie used to be MENKO or Coordinating Minister for Social-Political Affairs. He was responsible for helping to combat the haze. He was telling me how, in one of those years when the haze was quite bad, they got the Russians to help and they leased water bombers from the Russians. And against the advice of the civil aviation authorities, he decided to take a joy ride to watch the water bombing. The facilities on the plane were quite basic. He was telling me that there were no seat belts, just a plastic chair,

and you were supposed to grab the pilot’s seat while they skimmed the water surface, collected the water, and then bombed the fires. And this worked. When I spoke to Pak Marty on the phone, he said cooperation in the past had helped and we should continue to strengthen cooperation. He said yes, this year is a problem, but in previous years, we had succeeded; so we should continue to work together.

They have the plans. It is a big country, there are many players involved. Local authorities experience great difficulties. And it is not as if they themselves want it to happen. The former Governor of Jambi, Pak Zulkifli Nurdin, is a good friend and knows Singapore very well. One year, I called him up and said, "Look, we are prepared to help Jambi." I asked him where he was. He said he was in Jakarta and could not get back to Jambi because the haze was so bad there! And here we are talking about a PSI of 100, but for them, it is PSI of 200 or 300. So our approach should be that the most interested party in solving the haze problem is Indonesia itself, because millions of its own people are affected. And we should continue to encourage the DPR – the government is very clear about its position, but the DPR has got a life and voice of its own. And maybe here I can pass the buck to Members of this House. When you meet your counterparts in Indonesia, please also make the effort.

Supplementary question, Sir. The Minister, in his reply, said that the haze is over for this year. My question is: how about next year or the year after? Despite the efforts and the Minister talking to his counterpart in Indonesia, it seems to me that the haze remains and the situation does not improve. So, does the Minister not think that this is a diplomatic failure on the part of Singapore as well as ASEAN as a

group, and how does this reflect on ASEAN as a group in the international community?

Mr Low is right that diplomatically, we certainly hope to be more successful, but there are limits to what we are able to do. It does not mean that if we make stronger speeches or internationalise the issue, that it will necessarily help solve this problem. I think let us work with the nature of the problem. We know its complexity. It is likely to come back from time to time, depending on larger climatic situations. We know that in an El Nino year, when the ground is particularly dry, sometimes it is not possible to avoid forest fires completely. But certainly for this year and, in many cases in previous years, the triggering problems are man-made in that it is the easiest way to clear forests and plant oil palms. There is an elaborate international process now to certify oil palm that requires the big companies to be responsible and observe clear codes of conduct. And some of these companies are headquartered in Singapore. Some of them are Singapore companies. So, we should take a multi-pronged approach. Internationally, where we can help Indonesia overcome this problem, we should act at that level. Regionally, in ASEAN, we should do the same, through the corporate sector, or at the government-to-government and parliament-to-parliament levels. We should also teach farmers the techniques to overcome their problems of daily life in a way which is less deleterious to the environment.

So, I say "yes", we have not succeeded but we have not failed completely. We must continue to press on and not lose heart.

Mr Speaker, Sir, I would like to ask the Minister the same question. Despite them having a plan, they are dragging their feet. Will the

Minister take this up to an international organisation like WHO?

I think the important thing is to be effective. It is not just to give emotional satisfaction to our own sense of hurt and grievance. The important thing is to be effective, and if we can be effective without commotion, all the better. But if we need a commotion, we will have a commotion. But the key is to be effective. And we try very hard at all levels to do all we can. It is not just the Ministry of the Environment and Water Resources’ (MEWR) responsibility, but also all the Ministries that have an interest in this. I hope that NGOs and parliamentarians and the corporate sector will all do their bit.

Yes, Mr Low. Last question.

Thank you, Sir. How does the Minister know that by bringing the issue up to an international forum, as what Er Lee Bee Wah suggested, it will not be effective? Has he tried to do that?

These issues are raised at the international level from time to time. A few years ago, we had raised this at the United Nations (UN), and if it is necessary and helpful to raise this at the UN, WHO or any other international forum, we will continue to do so. Yes, we have been doing this.

4. Mr Lim Biow Chuan asked the Minister for Law (a) whether the Auditor-General had audited the Singapore Land Authority (SLA) in the last two years and why the alleged fraud committed in SLA was not detected; (b) whether there are additional findings on the full extent of the fraud committed; and (c) what are the

measures that have been taken to prevent a recurrence.

Mr Speaker, Sir, I will first give an update on the investigations so far. Investigations were undertaken into Koh Seah Wee's past activities, following the discovery of possible fraud at the Singapore Land Authority (SLA). These investigations showed that he may also have committed fraud at the Intellectual Property Office of Singapore (IPOS).

Koh joined Infocomm Development Authority (IDA) in 1997. He was deployed by IDA to Supreme Court, IPOS and then SLA. He left SLA and resigned from IDA earlier this year.

Koh's accomplice in the SLA case, Lim Chai Meng, joined IDA in 2006. SLA was his only posting.

At SLA, Lim was the officer who initiated IT procurement and evaluated quotations. Koh was the officer authorised to approve quotations. Koh and Lim are suspected to have conspired with several business entities to win IT contracts from SLA, and then submit false invoices to receive payment for the services and goods being procured, but which the business entities never intended to deliver. The fraudulent activities were conducted between January 2008 and March 2010.

At IPOS, Koh was the officer who initiated procurement and evaluated quotations. He is suspected to have conspired with one business entity to submit lowest quotations for IT maintenance services and goods being procured by IPOS. IPOS would then be billed for the services and goods which were never delivered. The activities took place between December 2005 and March 2007.

The perpetrators took careful steps to get the appearance of compliance and

normality. They kept the procurement amounts within approval limits, complied with the internal guidelines such as getting the requisite approvals and putting up the requisite paperwork.

The bulk of the charges for the suspected fraud at SLA and IPOS have been tendered in court. To date, the amount allegedly defrauded from SLA is about $12.18 million and the amount from IPOS is about $286,000. Of these, about $10 million have been secured pending the completion of the trial.

SLA and IPOS' procurement and finance processes were in accordance with procurement guidelines. Koh and Lim are believed to be have circumvented the checks and balances by colluding with each other and with business entities.

The Auditor-General did not audit SLA and IPOS during the period when the frauds took place. SLA and IPOS' financial statements and accounts were instead audited by external auditors, in accordance with the Auditor-General's requirements.

Sir, immediately after the frauds were discovered, SLA and IPOS launched their own internal investigations. The Ministry also set up independent Internal Review Panels to identify how the frauds took place and to recommend measures to tighten SLA and IPOS' procurement and finance processes.

The Review Panels have given their views and recommendations. Among their conclusions was that certain officers at SLA and IPOS did not exercise sufficient supervision over Koh and Lim and had not carried out their audit responsibilities thoroughly, and that there were weaknesses in the internal audit processes at SLA and IPOS. SLA and IDA have since taken disciplinary action against two officers whose oversight had

contributed to the fraud taking place undetected in SLA. As for the fraud at IPOS, IDA is currently conducting disciplinary investigations against Koh's supervisors during the period he was deployed at IPOS.

SLA and IPOS have since been implementing the recommendations of the Panels and the outcome of their own internal investigations. These include strengthening internal audit, centralising the procurement processes under one department, requiring a different officer to verify the request to call for quotation and reducing the limit for approval of financial transactions.

In taking these measures, we need, however, to strike a balance between adding more layers of checks and the resultant reduction in operational efficiency. We must guard against tightening up the system so much that the vast majority of legitimate transactions are hindered on a day-to-day basis. Adding more checks will slow down the work for many officers but may not necessarily increase our ability to detect fraud.

Sir, on this, I speak as someone who has been involved in investigating and taking follow-up actions in various such frauds in the private sector, including Barings. No system can guarantee to prevent fraud against a skilful operator. Even audits, whether external or internal, are not always guaranteed to pick up fraudulent activities. The real insurance against fraud is to have vigilant people supervising and discharging their responsibilities properly.

Indeed, the system of checks and balances is built on the basis that officers entrusted with the approval authority and supervisory responsibilities discharge these responsibilities diligently and with care.

They have to ask questions and undertake regular reviews. When they do not do so, there is opportunity for fraud.

Sir, let me emphasise that these facts that I have set out are based only on our investigations. They have not yet been proven in court. The answers I can give are also limited for the same reason because the cases are pending in court. I would add that investigations are still ongoing, including investigations into Koh's activities when he was posted to the Supreme Court between 1997 and 2004.

Sir, it was reported in the newspapers that the perpetrators of the fraud were driving opulent and luxurious cars. I find it difficult to understand why no one in the Government agencies had noticed that mid-level executives were driving such cars. Could the Minister clarify whether any measures are being introduced to ensure that regular checks are conducted by either the Chief Executive of the statutory board or other agencies if they detect any suspicious ownership of high-value assets by their staff?

The Member can be rest assured that if someone drives a Lamborghini to SLA's office, I think it will be picked up. They were careful in that they never drove these cars, from what we understand, to their offices. They took particular care to make sure that nothing in their lifestyle gave anything away.

Mr Speaker, Sir, I would like to ask the Minister whether he would elaborate on the current practice of internal audits by Ministries on statutory boards and also, in view of this case, whether there would be any increased measures in terms of the regime for internal audit. External audit is really looking at financial matters while internal audit will help each of the statutory boards look into the processes and also the independency of individual officers versus the process itself. So I would like to ask the Minister whether he

has actually looked into the internal audit regime for statutory boards.

Sir, the internal audit processes at both SLA and IPOS were very carefully looked into both by the Ministry as well as by the independent Review Panels. As I said, I did not want to go too much into the details because the cases are pending. But as I have indicated in my answer, strengthening the internal audit processes in both places is part of the recommendations, and steps have been taken and will be taken. But I also want to add a note of caution. Often, internal audit processes do financial audits and financial audits, even if they have been conducted properly in this case, may not have – I do not say "will not have" – picked up if care was taken to make sure that all the documentation was properly done. The real answer is that at every level, the supervising officers must exercise vigilance, proper supervision and checks carefully. As I have admitted, that was lacking in respect of the supervisors in this case, and investigations are ongoing at IPOS in respect of the supervisors, and at SLA, certain conclusions have been drawn.

Last question, Mr Low.

Sir, I would like to ask why the CPIB or the Commercial Affairs Division (CAD) was not able to pick up this case.

Sir, from my answers, if I can summarise the earlier answers, the perpetrators took considerable care in making sure that their activities were not spotted, both in their lifestyle and in the way they carried out the fraud, combining with external vendors. So it is a combination of a couple of people inside and external vendors together making sure that the paper trail was complete and could not be picked up. But one of the

certainties is that through a system of rotation, these things do get picked up and when they were picked up, then, of course, the Police got involved immediately and investigations were conducted, and $10 million was seized. The Member can be rest assured that if any irregularity comes to light, it will be exposed and swift action will be taken and answers will be given in Parliament.

Mdm Halimah, last question.

The Minister did mention that the Auditor-General did not do audits of SLA and IPOS during this period. My question to the Minister is: why is that so? What criteria does the Auditor-General use as to which statutory board or Ministry it should audit and why it does not audit others?

My colleague, Mr Shanmugaratnam, is more than happy to answer that question. So he will answer it for the Auditor-General.

5. Mdm Halimah Yacob asked the Minister for Finance (a) what lessons can be learnt from the alleged cheating incident involving two SLA employees; (b) whether there were any lapses in the Government guidelines for finance and procurement processes; and (c) what steps have been taken to strengthen the internal processes to help prevent a recurrence of such an incident.

6. Mr Low Thia Khiang asked the Minister for Finance whether the alleged fraud of $11.8 million committed in the Singapore Land Authority has exposed a gap in public sector financial governance regulations and their implementation.

7. Assoc. Prof. Fatimah Lateef asked the Minister for Finance (a) if there are any requirements for Government agencies to have in place industry-specific guidelines and policies for managing fraud risk besides those for general risk management; and (b) whether there are clear pathways or channels for whistle-blowing.

Mr Speaker, Sir, if I may take the next few Questions together?

Yes.

Mdm Halimah Yacob and Mr Low Thia Khiang had asked if the alleged fraud at SLA, and I suppose IPOS as well, exposed gaps in the rules and guidelines governing finance and procurement processes in the public sector.

The recent cases at SLA and IPOS did not come about because of gaps in rules and guidelines in public sector procurement. In particular, in procurement, the required segregation of roles between officers evaluating quotations or bids and those making the awards was in place in the two agencies during the period in question. The SLA and IPOS cases instead occurred because individuals, allegedly, colluded to get around the required checks and balances to cheat the system.

However, the cases reflected two weaknesses. First, failure in supervision. Good supervision requires not just knowledge of the Government rules and procedures, but continual vigilance. This vigilance was lacking in those responsible for supervision of the IT Department at SLA and IPOS at the time. Second, there were gaps in internal audit in both agencies. As the Minister for Law has just stated, the Ministry of Law has acted to rectify the shortcomings both in supervision and audit.

The Ministry of Finance (MOF) reviews public sector procurement rules and guidelines on a regular basis. In fact, following the alleged fraud cases at SLA and IPOS, a further review of public sector rules was undertaken. This included a comparison with best practices in the private sector. The review affirmed that the public sector procurement rules, for both quotations and tenders, were fundamentally sound. There are appropriate checks and balances built into the system of procurement based on quotations, and these apply to lower value transactions (in other words, those below $70,000). All public sector agencies follow more stringent processes for larger value procurements, for which tenders have to be called. For example, tenders have to be approved by tender boards comprising three individuals. Tenders account for some 95% of total Government procurement.

We are nevertheless looking into possible improvements to the system. For example, MOF will encourage agencies to adopt good practices, such as the periodic rotation of officers with procurement responsibilities, whenever feasible. It was, in fact, through a rotation of IDA officers in SLA that irregularities were detected in the recent case.

In addition, IDA intends to help agencies, including statutory boards, to strengthen the management and monitoring of IT maintenance services. It will also help them draw up the scope of audit of IT procurement, which is more specialised than other types of procurement. This is an example of the industry-specific approach that Assoc. Prof. Fatimah Lateef had raised.

But even as we seek improvements to the system wherever possible, the safeguards must be workable. We must ensure that procurement can be carried out efficiently, and we do not add layers of bureaucracy to perform more checks

and balances. We should do what we practically can to reduce the risk of fraud, but keep Government lean, efficient and responsive.

What matters, therefore, is to have a sound and practical set of rules, and to back them up with effective supervision on how they are implemented. This does not mean that a supervisor has to take on the role of approving quotations or transactions personally. But proper and alert supervision will make it less likely that irregularities in budgeting and procurement will pass unnoticed. MOF has reminded all Government agencies of the importance of vigilant supervision of procurement operations to minimise opportunities for fraud.

We nevertheless will not be able to eliminate human lapses in supervision entirely across the public sector. This is why we need a robust system of audit to help detect procurement irregularities as well as deter potential misdoings. Internal audit plays an important role in public agencies, whether undertaken within the organisation or outsourced to commercial auditors. Last year, the Auditor-General's Office (AGO) conducted a review of the governance framework and internal audit practices of statutory boards. Based on its findings, it has established a set of best practices in June this year, which MOF has circulated to all statutory boards. This exercise pre-dated the SLA case coming to light.

A second level of audit comprises external audits. Statutory boards' financial statements are subject to annual audits by either the Auditor-General or external commercial auditors. These regular annual audits are for the primary purpose of expressing an opinion on the financial statements and do not focus on internal controls. In addition, therefore, the Auditor-General's Office periodically audits statutory boards in selected areas of internal controls, compliance with

regulations and avoidance of waste. Each year, the Auditor-General's Office carries out such audits of all 15 Ministries in Government, all nine Organs of State and around 18 other entities which are mainly statutory boards. The Auditor-General's Office last audited the SLA in FY 2007/08 with the field work being done in 2007. It began its audit of IPOS in December last year, before the recent case of alleged fraud surfaced.

The Auditor-General's Office cannot audit all 64 of our statutory boards in all areas of their operations every year, and hence directs resources towards areas of greater significance. In the light of the SLA and IPOS cases, the Auditor-General's Office will re-prioritise the areas being selected for audit in the next audit cycle to give greater attention to IT services procurement and contracts. However, the external audits performed by the Auditor-General's Office serve as an extra layer of check, and are not a substitute for the statutory boards' internal audit responsibilities.

I should add that soon after the discovery of alleged fraud in SLA, the Government had also performed checks on all transactions involving the two officers suspected of fraud as well as all transactions between public sector agencies and the specific vendors involved in the SLA case. This was indeed how the alleged fraud at IPOS was surfaced.

There is a further safeguard, which Assoc. Prof. Fatimah Lateef referred to in her question. We must ensure that channels are open for whistle-blowing, because that too has a role to play in uncovering fraud. Within the Civil Service, there are established channels for officers to provide feedback and report wrongful practices. Officers can report cases of misconduct to their supervisors, the HR

department, the Permanent Secretary or the Head of Civil Service. They can also report matters pertaining to conduct and discipline in the Civil Service to the Public Service Commission. Feedback, whether from public officers or external parties, is taken seriously and acted upon. In fact, in response to specific feedback in the past, the Auditor-General has carried out audits of selected financial transactions with the purpose of uncovering irregularities, including fraud.

The Singapore Public Service has, over the years, established a track record of clean and effective governance. From time to time, however, there have been dishonest public servants, who have found ways to get around the rules for personal gain. The Government takes a very serious view of each such incident. One of the strengths of our system is a robust process of investigation and prosecution, to bring perpetrators of fraud or corruption to justice and deal with them with the full measure of the law.

In sum, I am sorry to have taken a bit of time on this – there are several elements involved in keeping the integrity of our system of public sector procurement. It takes sound rules and safeguards, operated by upright officers and backed up by conscientious supervision and audit; open channels for possible wrongdoings to be reported; and, finally, the deterrent effect of robust law enforcement. We have a working system, and I assure Members we will keep improving it wherever possible.

Sir, I want to thank the Minister for his clarification but I am a little puzzled because the Minister said that there are no gaps in the rules and guidelines. Yet, at the same time, the Minister did say that gaps in the supervision on the part of the supervisors. So, obviously, there is some systemic problem involving supervision of officers for auditing purposes. My second question

is: if the Auditor-General cannot audit all the agencies in a particular year, does that also then open the door for such frauds to take place? People know that in a particular year, which statutory boards or agencies are being audited and therefore they do have sometime in order to commit those frauds. My third question is to ask whether this is confined to IPOS and SLA or whether there are other statutory boards involved? Is there a check being done on other statutory boards to see whether there are any other fraudulent attempts on the part of staff in those statutory boards as well.

Mr Tharman Shanmugaratnam: First, I do not think they have a systemic problem. As I have explained, the rules and guidelines are in place. They are not out-of-sync with best practices elsewhere, including in our private sector. We will fine-tune and refine them from time to time and, indeed, there are some refinements we are thinking about. But the rules and guidelines are not what explain what happened at SLA and IPOS, and they in fact had practised the rules and guidelines. There was human failure. Human failure, first, in supervision and, second, in audit.

There is no reason to believe that these human failures are widespread. But we are alert. MOF has reminded all statutory boards, quite apart from our Ministries, to pay more attention to supervision of procurement. We have provided a detailed checklist of questions that have to be asked on matters of procurement, including procurement of IT and maintenance services. IDA, on its part, is seeing how it can help agencies, including our small statutory boards, to improve the management of IT maintenance services and how we can also strengthen audit of IT maintenance services because this is a more specialised area than procurement in general, or audit in general. So, we are seeing how we can improve the system but there is no

reason to believe that the problems are systemic.

The Auditor-General's Office cannot, as Mdm Halimah mentioned, audit all 64 statutory boards in all areas every year. The primary responsibility rests on the statutory board itself. Its internal audit responsibilities are its responsibilities and the board's responsibilities. That of the board and the audit committees'. And it is a requirement for statutory boards to set up audit committees. The Auditor-General's Office provides an important second check. It focuses on selective areas of internal audit in each audit cycle. From time to time it will re-prioritise and, indeed, following the SLA and IPOS' cases, it will be placing more emphasis on IT procurement. But we should try and avoid the temptation to look backwards at the last mistake, at the last mishap, the last occurrence of fraud and focus all our resources on avoiding that. Because it could be something else the next time. So we have got to maintain a balance, keep our priorities and keep people guessing as to what the Auditor-General is going to focus on. The Member had a final question which had to do with other statutory boards. I can assure Mdm Halimah and Members that we have been reminding all our statutory boards of the need for vigilant supervision of procurement operations and, specifically, on IT maintenance operations, the need for vigilant audits of these operations.

Sir, the Minister said that this is a case of human failure or perhaps the supervision problem of the officer concerned. I would like to ask what MOF is doing to deal with the problem of human failure and what are the safeguards to make sure that the supervisors do supervise properly and also, who supervises the supervisors? Second supplementary question, Sir. Does the Minister not agree that as a layman, it will be difficult to understand, despite the internal audit, external audit

and whatever stringent rules that MOF lays down on the Civil Service on procurement procedures, and yet this could happen and it is a huge sum of money that is being cheated out of the Government's coffer by the officer and not only in one Ministry, but also in some other agency as well and during such a long period of time? So the question is: what is internal audit, external audit and supervision for? From a layman's point of view, I suppose it should be very stringent and should have prevented all these happenings.

Mr Tharman Shanmugaratnam: First, I agree as a general proposition that we should try to minimise the risk of any such occurrence. I think Mr Low will agree with me that there is no system – private sector or public sector – which can eliminate it entirely because from time to time there are, unfortunately, lapses in human conduct, and I am not referring to the chaps who allegedly perpetrated fraud but to lapses in supervision. We have got to try and minimise those lapses. But there is only so much you can do through rules and guidelines. For instance, one way of minimising lapses is to have more people involved. For tenders, for instance, for large transactions – it is a much more robust process. First, robust process of assessing the need for a tender; robust process of assessing the bids that have come in; and the final approval processes are more onerous. Several individuals involved, and sometimes several layers of individuals involved. If we do that for every single procurement transaction in the Government, it would really slow things down. It would make Government less efficient and less able to serve the needs of the public. So we have got to make sure the rules and guidelines are sound but focus on backing them up with vigilant supervision. And that is not just an empty pronouncement. We are also providing guidelines on supervision which

Ministries and statutory boards should take heed of, and some helpful tips on how to go about supervising procurement operations. Quite specific tips, for instance, on how you search through the data to see if certain companies are appearing too frequently or detect certain trends in the data that should be a red flag. So this is something we are improving but I do not think that we would be able to eliminate all human failure for all time in all agencies. I say that without the slightest suggestion of complacency on our part. We do want to improve and minimise the risk of fraud. I think that answers your question.

Assoc. Prof. Fatimah Lateef (Marine Parade): Sir, I thank the Minister for the assurance and explanation. Can I ask: has the Ministry seen an increase in the number of referrals or complaints about fraudulent cases? Also, with this current climate in which we have sophisticated IT technology and so on, how many of these cases actually turn out to be true positives?

I do not have as detailed data as Assoc. Prof. Fatimah Lateef may like but to just give a feel, the Auditor-General's Office receives roughly 50 cases of feedback, specific complaints or information on possible fraud or misdoings each year. It follows up on complaints which have some credibility associated with them and where there are some material, financial impact associated with them.

I would like to ask the Minister, as a matter of prudence, how would the Government consider fine-tuning the procedure of declaration of assets by civil servants and what checks are made to ensure that declarations filed in by the civil servants are true. In the case of the two SLA employees, what assets did they declare in their declarations?

On the last part of the Member's question, I would rather not get into the matter because investigations are proceeding on the two employees – what they did and did not do. On the declaration of assets by civil servants: actually the system is in place and it is quite robust. Whether someone lies or fails to declare his/her assets is a separate matter and, in this instance, the matter is being investigated.

8. Mr Viswa Sadasivan asked the Prime Minister (a) how many Singaporeans residing overseas are eligible voters in the next General Election (GE); (b) whether there are plans to modify the eligibility criteria to encourage more Singaporeans living abroad to participate in their country's GE; and (c) whether there have been modifications to the rules and modalities (eg, use of technology) to make it easier for those eligible to cast their votes.

Mr Speaker, Sir, t he National Population Secretariat estimates that there are about 180,000 Singaporeans residing overseas. But we are not sure how many amongst them are eligible to vote as overseas voters. Apart from meeting the conditions that eligible voters must be Singaporeans aged 21 and above, and must be listed on the current register of electors of a constituency, overseas Singaporeans also have to reside in Singapore for a cumulative period of 30 days within three years before the cut-off date of electoral registers, before they are considered eligible to register to vote overseas.

Mr Viswa Sadasivan asked whether there are plans to modify this eligibility criterion of residence. There are no such plans as the residential requirement was

shortened only in August 2008 after the last General Election. Previously, overseas Singaporeans who wish to register as overseas voters must have resided in Singapore for a cumulative period of two years within five years immediately before a prescribed cut-off date which is the cut-off date for the registers of electors. Additionally, before the change of residential requirement, overseas Singaporeans had only 21 days to register. Now, the registration period has been extended up to the time when the Writ of Election is issued. Furthermore, the Elections Department has also introduced an online facility to make it more convenient for eligible overseas voters to register, and to apply to change their allotted overseas polling station or cancel their registration subsequently should they leave the city or country where they first registered as overseas voters. To allow more overseas Singaporeans access to overseas voting, New York City has been included as a polling station, making a total of nine.

Elections Department has studied other methods of voting, such as Internet voting and postal voting but found that these are not as robust and reliable as the tried and tested methods of marking a ballot paper. The Internet platform, while convenient, is vulnerable, for example, to power-outage, hacking and denial of service attacks. Without a printed voting slip, auditing the voting results in the event of a petition to the Election Judge can be problematic. As regards postal voting, there is no guarantee of voting secrecy, as we do not know who marked the ballot paper. It is also difficult to ensure that all ballots will be mailed back to the Elections Department on time to be counted. Missing votes will also cast doubt on the integrity of the process. In the UK where postal voting is permitted, there had been reports of electoral fraud.

For now, the paper ballot is still the simplest and most transparent method of

voting that can ensure the integrity and secrecy of the voting process.

I wonder whether Deputy Prime Minister Wong could give the House an update on how many eligible voters have registered themselves so far for the coming General Election (GE)? The last round, we had about 1,000-odd voters. So I wonder if he can update us on whether the relaxed criteria has led to a larger number of people registering.

May I ask when were the 1,000-odd voters made known?

Sir, I was referring to those registered for the previous GE. It was about 1,017.

Sir, the previous GE registered only about 550-odd overseas voters and not 1,000-odd.

Ms Sylvia Lim: Sir, can I clarify? I have the data here actually. One thousand and seventeen registered but on Nomination Day only certain constituencies were contested, so that led to 500-over being eligible to vote. That was what I meant.

Well, from the data I have here, 553 registered to vote before the 2006 GE and this is the data I have but Ms Lim may be right. There may be 1,000-odd that Ms Lim had mentioned. From what I am told now, we have 1,325 Singaporean overseas who are eligible to register to vote have registered.

Could the Minister give his opinion as to whether there is a correlation between the number of people who have registered and the convenience or inconvenience factor in voting? In some countries, I gather that Singaporeans living abroad have to travel seven hours to

get to a polling station. I am wondering whether a factor like this is keeping the number of people from registering even though they are interested to exercise their duty to vote? If so, is the Government doing enough to try and make it easier? I understand some of the limitations that the Minister has highlighted. They are reasonable. We need to make sure that we keep election fraud and other such issues at bay. But it is a question of balancing that with continuing to strive to make it easier for our overseas voters to cast their votes. I gather that countries like the United States of America do go out of their way to allow for their voters to cast their votes by mail. I am really wondering whether we would reconsider that because there are quite a few developed countries that do it.

Sir, as I have said, postal or mail voting does not guarantee voters' secrecy. So as far as this is concerned, we do not think that that is the path we want to embark on. As to whether we have made it convenient for people to vote or not, and the accessibility of the voting stations, as I think that is the main point: we only set up voting stations overseas where we have a significant number of Singaporeans residing in those countries. We can only provide for that when voting takes place in the Embassy building for good reasons – safety, security as well as diplomatic immunity that we enjoy. We have 28 Missions where we have High Commissions or Embassies in capital cities of large countries, like America or Australia. In some places, we do provide for more than one station, like the US or China, but there is a limit to how far we can stretch and make accessible voting stations in the places where Singaporeans live. So right now, we have nine voting stations. In time, we may increase if there is a significant number residing in those places and if they are eligible to vote. But I think so far, we have tried our best and minimised the inconvenience to them by

allowing Singaporeans to register online. When they move to another place or come back to Singapore, all they need to do is to go online and tell the Elections Department that they are in a particular place and the register will be updated again. When the register of electors is out for re-certification, that is another time for us to tell them again when to register. For those who have already registered it, is also quite simple. The Elections Department will inform them by email if they have maintained the same email address, that they are supposed to pre-register. All they need to do is simply declare that they meet the residential criteria.

9. Ms Sylvia Lim asked the Senior Minister what will be the expected impact on the Singapore economy arising from the US Federal Reserve's announcement on 3rd November 2010 of a "quantitative easing" of the US economy by US$600 billion.

10. Mr Teo Siong Seng asked the Senior Minister if the recent decision by the US Federal Reserve to pump US$600 billion into the financial system will have any inflationary repercussions on the Singapore economy, especially in driving up our currency, stocks and property.

11. Mr Liang Eng Hwa asked the Senior Minister (a) whether there has been a significant increase in capital inflows into the Singapore market in recent months; (b) whether the continued monetary quantitative easing in the US will lead to further capital inflows into Singapore and pose asset inflation risks; and (c) whether some form of control measures are necessary.

Mr

Speaker, Sir, if I may take the next three questions together?

Yes.

The US Federal Reserve, or the Fed, has recently embarked on further policy measures aimed at supporting the US economic recovery and coaxing inflation back to the level that Fed policymakers consider consistent with healthy economic growth. The Fed will ease monetary conditions by purchasing longer-term US Treasury securities, amounting to some US$600 billion by mid 2011. It will do so in phases, and will adjust the amounts as economic conditions change. So this is not about US$600 billion being released into the markets all in one shot.

The Fed’s latest round of monetary policy easing is not fundamentally different from its actions in 2008 and 2009, when it purchased large amounts of securities although mainly of shorter maturities. Those actions had contributed to stabilising financial conditions in the US and globally, and supported the recovery from the crisis. The Fed hopes that its latest policy measure will lower longer term interest rates and stimulate economic activity – in particular by making housing more affordable, encouraging corporate investments and raising stock prices and consumer spending. Whether the Fed’s measure will be effective remains to be seen. But if the policy does succeed in stimulating a new cycle of growth in the US economy, or at the very least in reducing the risks of a further slowdown in the US economy, it will be positive for Singapore and most other countries in the region. The US remains one of Asia’s largest trading partners, and the state of its economy is still a key concern.

The basic reason why capital flows into Asia have increased, including into Singapore, has to do fundamentally with

the very different stages of economic recovery being experienced in different parts of the world economy. Expansionary monetary policies in the industrialised economies, aimed at supporting their still fragile economic recovery and avoiding further escalation in financial market stresses, have led to record low interest rates. In contrast, the Asian and emerging economies generally have rebounded strongly from the crisis and have begun to tighten their macroeconomic policies. The increase in capital flows to the region reflects these underlying divergences, notably the differences in prospects for both growth and inflation between the advanced and emerging economies. Capital has flowed to this part of the world in search of higher returns.

Policymakers in the region are fully aware of the risks posed by the increased capital flows. Much of it has comprised short-term investments rather than longer term, direct investments, and can hence be volatile and easily reversed. In Singapore, the Monetary Authority of Singapore (MAS) had taken into account this volatility in global financial markets in its most recent monetary policy move in October, which involved a widening of the band in which the Singapore-dollar exchange rate can fluctuate.

The capital inflows are generally being intermediated efficiently through our domestic financial markets and banking system. Nevertheless, we are closely monitoring the impact of capital flows on the economy and especially our asset markets. We are not contemplating introducing capital controls, but will continue to rely on a range of policy tools to ensure that capital flows do not threaten financial stability or cause a property market bubble.

With our economic recovery more firmly entrenched, the Government has

been withdrawing the expansionary macroeconomic policies implemented during the crisis. As Members know, we have also introduced a series of pre-emptive measures since September last year aimed at promoting a more stable and sustainable property market. These have had some calming effect on the market. The Government will continue to monitor the situation closely and take additional steps, if necessary, to ensure financial stability and sustainable asset markets.

Sir, I thank the Minister for the reassuring reply. While I understand that as an international financial centre, we do experience outflows and inflows. My further question to the Minister is whether in the midst of these in- and outflows, how much is leaked to the local markets and, hence, driving up the asset prices and Singapore dollar? Secondly, whether it is the case where the foreign capital inflows are more short term and "hot money" in nature, while the outflows which may come from local sources, are longer term in the investment horizon? Hence, the related question is what will happen if US begins to unwind its quantitative easing? Would there be a massive capital outflow and what would be the impact to Singapore and Asia?

First, in response to Mr Liang Eng Hwa's general point about inflows of "hot money", I would say that by and large Singapore's financial system has a way of intermediating these inflows, so that what is not needed domestically tends to get recycled overseas. In fact, some of it goes back to the developed countries' market themselves, including the United States. The main reason for concern on asset markets, which is not just a short-term concern but may be with us for quite a while, is that interest rates are extremely low. And that is a function of easy monetary policies in the US and the

developed world. Our three month deposit rates are about 0.2%-0.3%, and inter-bank rates are barely higher. So we have extremely low interest rates on deposits in the banking system, and that leads to investors, including households, wanting to search for yield somewhere else. That is the problem we have to address for some time to come. It means we have to be vigilant to the possibility of a property market bubble and take further measures when necessary. The MAS has a good handle on its prudential regulation of our banks, so that we are not really concerned, at least not fundamentally concerned about – systematic stability in our financial system. We are concerned about property prices rising too quickly and too far. Our three rounds of measures so far have been aimed and injecting some stability into that process.

Thank you, Sir. I would like the Minister to elaborate a bit on the expected effect of inflation in Singapore generally and how the Government intends to manage the risk of inflation caused by the Fed's latest move, if it is a concern.

The main reasons for inflationary pressures picking up: first, the fact that we are growing very rapidly, the labour market is tightening and in fact most markets for resources are tightening, including commodities. There are also some food price shocks because of shortages in supply in the region, including in China. Thirdly, Ms Sylvia Lim does have a point in that easy monetary policy in the developed world has a way of leading to flows of liquidity all around the world and, sooner or later, flows of liquidity lead to more purchases of goods and services. Demand is picking up partly because the interest rates are very low, and people are looking for other things to buy, and that tends to force prices up over time. We will be on guard. MAS has its eyes very clearly centred on inflation as its principal

objective – keeping inflation stable and relatively low in the medium term compared to the rest of the world.

12. Mr Teo Siong Seng asked the Senior Minister if he can explain the rationale behind the planned acquisition of the Australian Securities Exchange by the Singapore Exchange and how it will benefit the local investors in Singapore.

13. Mdm Ho Geok Choo asked the Senior Minister (a) how will the proposed merger of the Singapore Stock Exchange and the Australian Stock Exchange benefit Singapore and Singaporeans; and (b) how will this merger position Singapore as the premier stock exchange in the region.

Mr Speaker, Sir, if I could take the next two questions together?

Yes.

On 25th October 2010, the Singapore Exchange (SGX) and Australian Securities Exchange (ASX) announced that they had entered into a merger implementation agreement. They stated that the proposed combination of SGX and ASX would bring together complementary businesses and their respective strengths to serve investors better and leverage on economic growth in the Asia Pacific. They noted that although the ASX and SGX would remain separate legal entities and would be locally regulated, the merger would diversify the product and customer bases of both exchanges. For example, the merger would offer investors access to the second largest listing venue in Asia Pacific with over 2,700 listed companies from 20 countries, including more than 900 natural resource companies and the largest number of REITs and exchange-traded funds in the Asia Pacific. SGX and

ASX also said that a combined group will enhance its attractiveness as a partner of choice for future exchange industry collaboration, to tap into strong regional growth.

The Government cannot judge the commercial merits of the proposed merger. The commercial merits will be decided by the respective shareholders of the two entities. Indeed, the transaction would need to be approved by the requisite majorities of the shareholders of both SGX and ASX.

Regulators on both sides would also need to be satisfied that the proposed transaction meets all regulatory requirements in their own jurisdictions. In Singapore, the Monetary Authority of Singapore's (MAS) objectives as the markets regulator are spelled out in the Securities and Futures Act, as part of its overall mandate of fostering a sound and reputable financial centre. This means that MAS has to be satisfied that the Exchange remains able to maintain efficient and transparent markets, and is able to minimise systemic risks. In Australia, the tradition regulatory objectives, the transaction also needs the approval from the Australian parliament, and would have to pass the scrutiny of the Foreign Investment Review Board.

14. Assoc. Prof. Paulin Tay Straughan asked the Minister for Trade and Industry whether the rising trend of the Consumer Price Index is cause for concern and if his Ministry has plans to manage inflation in Singapore in the next year.

Mr Speaker, Sir, following the strong recovery in Singapore’s economy, headline inflation rose from 0.9% in the

first quarter on a year-on-year basis to 3.4% in the third quarter.

The rise in the inflation rate mainly reflects the higher cost of private road transport. Specifically, car prices have risen significantly on account of the reduction in the number of Certificates of Entitlement issued. However, in recent months, we have also started to see more broad-based price increases, such as in accommodation and services.

In the near term, inflation is likely to rise further. Cost pressures are growing, reflecting the high level of economic activity in Singapore. Notably, the cumulative rise in employment has led to some tightening in Singapore’s labour market. At the same time, food price inflation is expected to accelerate over the few months, given the spate of weather-related supply disruptions in various parts of the world.

In view of these price pressures, the Monetary Authority of Singapore (MAS) tightened its monetary policy in October 2010 by shifting to a slightly steeper appreciation of the monetary policy band without altering the level at which the band was centred. The band was also widened slightly in view of the volatility across international financial markets. This decision followed the tighter policy stance adopted in April this year to pre-emptively address emerging inflationary pressures arising from the sharp economic rebound.

The tighter monetary policy will dampen imported inflation as well as ensure that cost and price pressures do not become entrenched. The continued diversification of our sources of food imports will also help mitigate price fluctuations and keep food prices low. Looking ahead, while the Consumer Price Index (CPI) inflation will rise to around 4% at the end of 2010, it will moderate to around 2% in the second half of 2011.

Singapore’s full year inflation in 2010 is expected to stay within the range of 2.5% to 3%. MAS expects CPI inflation in 2011 at 2% to 3%.

As the Finance Minister has said the Government will continue to keep a keen eye on inflation and cost of living to ensure that they remain at manageable levels. For most Singaporeans, the best defence against inflation is good quality jobs that provide good wage growth. The Government will continue to provide a favourable environment for businesses to thrive and for our economy to grow. At the same time, we also need the businesses and Singaporean workers to play their part in raising productivity, which will help mitigate the inflationary effects of wage increases in a tightening labour market.

Thank you, Mr Speaker. One supplementary question. Given the concern with food price inflation, will the Ministry consider lowering GST in the short run until inflation indications stabilise?

Mr Speaker, I think the GST question should be directed to the Minister for Finance. I will, however, address the matter on food prices. I think our best strategy is really to ensure, first, that we have diverse food sources so that we are not locked into any one particular supplier which then means that if there is disruption, we have shocks in our system. The second thing is to ensure that the markets remain competitive. In other words, we have a competitive market for food products in Singapore as well and that will ensure that we are always given a supply of food which is competitively-priced, not necessarily lowly-priced because it depends on what the global market prices are. Those are our main strategies – diversification and competitive markets.

Mr Speaker, I would like to ask the Senior Minister of State what measures would the Ministry consider to implement to help the low-income Singaporean families in such a situation.

Mr Speaker, Sir. There is already a slew of measures in place arising from the Resilience Package that was implemented last year and that included measures like the Workfare Income Supplement Scheme. Apart from that, we have also got very targeted measures such as U-Save which is specifically aimed at utilities and for low-income households. I think the Government has given the commitment and continues to remain committed to ensuring that we will provide targeted assistance to those who need it.

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

15. To ask the Minister for Transport (a) what is the justification for the rate increase at 23 Electronic Road Pricing (ERP) gantries; (b) whether traffic flow is constantly monitored in these areas; (c) how effective has the ERP system been in easing traffic congestion during peak hours on expressways, especially the CTE; and (d) what other measures are being taken to alleviate traffic congestion, besides raising ERP rates.

16. Mdm Cynthia Phua asked the Minister for Transport in introducing the recent revision of ERP charges (a) what are the criteria used to determine the optimal speed range for the roads; (b) whether the Ministry takes into account that between 2007 and 2010 the population has risen by at least 500,000 people and 45,000 more vehicles which will invariably affect the optimal speed range; and (c) whether the Ministry will review the optimal speed range to reflect

the higher movement of traffic in line with the population growth.

Question No. 15, Sir.

Mr Speaker, Sir, with your permission, may I take Question Nos. 15 and 16 together as they are related?

Yes.

Sir, our ERP system helps to ensure smooth-flowing traffic on our roads by managing the demand for driving. As the demand for driving changes over time, the Land Transport Authority (LTA) reviews the ERP rates on a quarterly basis in February, May, August and November as well as for the two major school holidays in June and December. ERP rates are adjusted up or down, when necessary, to maintain traffic speeds within the optimal speed ranges. The optimal speed ranges of 45 kph to 65 kph for expressways and 20 kph to 30 kph for other roads, were determined taking into account the physical capacity of the roads. They are calibrated to allow the optimal number of vehicles on the roads while ensuring that traffic flow does not degenerate into start-stop situations.

In the recent fourth quarter review where ERP rates were raised for some half hour timeslots, LTA had carried out traffic speed measurements of the relevant roads over a two-week period in October, and from these data, determined that traffic speeds had fallen below the optimal range.

The regular reviews of ERP rates provide a self-adjusting mechanism, based on prevailing traffic conditions, to ensure that ERP continues to be effective in

maintaining smooth traffic flow on our roads. To answer Ms Irene Ng, traffic speeds on the CTE have been consistently maintained within the optimal range of 45 kph to 65 kph during the ERP operating hours. If we look across nationwide, we have been able to keep at least 95% of our road network within that optimal range during the morning peak hours.

Mdm Cynthia Phua asked whether we should review the optimal speed range to reflect the higher traffic due to population growth. This is not prudent as the optimal speed ranges are determined based on the physical capacity of the roads. Allowing a lower speed threshold because of population growth will simply lead to poorer service levels on our roads and more widespread congestion, as the physical capacity of the roads remain unchanged.

We do not, however, rely solely on ERP. We adopt a holistic approach to meet the needs of a rising population and increased economic activities, with ERP being considered only as a last resort. Existing roads are widened or new roads are built wherever possible. However, given our land constraints, relying on public transport which is the more efficient way to cater to our growing transport needs has to be the way forward. And that is why the Government is spending $60 billion to double our rail network in the next 10 to 15 years. We are also putting in more priority measures on the roads to speed up bus travel such as extending bus lanes and the Mandatory Give Way to Buses scheme to more locations. At the same time, we recognise that vehicle population growth has to be managed. Therefore, we have also lowered vehicle population growth rate from 3% to 1.5% per annum.

Sir, there is no silver bullet here to ensure smooth-flowing traffic. Instead, all these measures are necessary to ensure that Singaporeans continue to enjoy a

high quality living environment in one of the most densely populated city states in the world.

Thank you, Mr Speaker. The Minister said the ERP charges are based on the physical capacity of the roads. I fully support the Minister's point that we should go on public transport. But with the widening of the CTE and because the ERP charges are increasing at a very fast rate, will the residents in the Northeast corridor have some relief in terms of lower ERP charges, in view of the bigger capacity of the CTE roads?

The Member is right in that we are doing some widening works on the CTE. If that leads to significant traffic improvement, it would be reflected when we conduct our quarterly review and the ERP rates will be adjusted accordingly.

Thank you, Mr Speaker. I would like to ask if the Minister would consider a waiver of the evening ERP rates along the CTE.

The evening ERP rates along the CTE are again to ensure smooth traffic flow during the evening. If we were to waive them, it does not mean the congestion will disappear. The congestion will still be there.

17. Mrs Mildred Tan: asked the Minister for Transport (a) whether the Ministry will consider giving free public transport to children below the age of six given that this is the case in many developed countries; and (b) how is the height limit of 0.9 metre for free public transport decided upon and whether there is a basis to move this limit upwards.

Mr Speaker, Sir, concessionary travel on basic bus and train services are determined and granted by the public transport operators (PTOs). As the costs of such concessions are cross-subsidised by other full-fare paying commuters, the operators would have to take this into consideration when implementing any change to the concessionary schemes.

At present, pre-schoolers who are above the height of 0.9 metre and below the age of seven years enjoy concessionary travel through Child Concession Cards which can be purchased at any TransitLink ticket office. These allow pre-schoolers, regardless of their height, to travel at concessionary rates on public transport. Once they enter primary schools at seven years old, they will continue to enjoy concessionary fares as students.

On the height limit, only infants in arms travelled for free on buses previously. Since the introduction of the MRT system, sensors on our MRT fare gates prevent the gates from accidentally closing onto a commuter passing through. This is to ensure the safety of commuters. These sensors have been installed at a height of 0.9 metre and children below 0.9 metre may first pass through the opened gates safely, followed by a fare-paying adult commuter. Therefore, it was decided that children up to 0.9 metre in height who are accompanied by a full-fare paying passenger could be allowed to travel free on the MRT system. To ensure consistency across the different modes of travel, bus operators extended free travel from infants in arms to children up to 0.9 metre in height on buses as well.

As for raising the height limit of 0.9 metre so that more children can enjoy free travel, the cost of such free travel will have to be cross-subsidised by other full-fare paying commuters. Similar to other

concessionary schemes, this is something the operators would have to consider carefully. Nonetheless, the Government encourages the public transport operators to extend concessions where they are able to do so.

I would like to thank the Senior Parliamentary Secretary for his reply. Would the Ministry consider providing areas for prams and wheelchairs on buses and trains as well?

Mr Speaker, Sir, we can highlight that to the public transport operators for them to consider. They will have to make transport more convenient for those in need, so we will put that referral forward.

18. Mdm Halimah Yacob asked the Minister for Manpower (a) if he will provide an update on the Workfare Training Scheme; (b) how many workers have benefited from the scheme and what is their profile; and (c) how much has been paid out under the scheme including the special awards for those who have completed a specific number of skills courses; and (d) what types of courses have they been attending.

The Workfare Training Scheme (WTS) was introduced in July 2010 to complement the Workfare Income Supplement (WIS) scheme. WTS encourages older low-wage workers to upgrade their skills through training so that they can improve their employability, upgrade to better jobs and earn more.

Over the past four months since the start of the scheme, about 16,000 low-wage workers have benefited from WTS. This includes low-wage workers who were given the Training Commitment Award (TCA) for completing their training since 1st July 2009. About $3.2 million has been disbursed. About 1,500 workers have enrolled in Workfare-Skill Up, which includes motivational workshops to help them overcome training barriers as well as workplace literacy and generic skills training to upgrade their skills and jobs over time. The majority of the beneficiaries are aged between 40 and 59 years. There are more females than males and most of them have Secondary and below education.

Employers of low-wage workers can send them for training under WTS. Low-wage workers themselves can also sign up for WTS programmes. Examples of the training courses attended by WTS trainees include Employability Skills, Food and Beverage, and Service Excellence and Generic Manufacturing programmes.

The Ministry and the Singapore Workforce Development Agency (WDA) have been working with partners such as self-help groups, Community Development Councils, grassroots organisations, and employer organisations to reach out to eligible workers and their employers, through direct mailers, mass media, community and other events. We also have targeted initiatives to increase WTS take-up and training, including working with NTUC to incentivise company-specific training programmes for workers, and working with merchant associations to carry out retail training on-site at heartland shopping malls.

Just over the last two days, over the weekend, WDA organised an inaugural WTS Roadshow in Bedok. It provided hands-on activities and career counselling on-the-spot to help low-wage workers –

3.00 pm

Mr Hawazi, your time is up. Order. End of Question Time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 24, 26, 29-31 and 37 on the Order Paper are reproduced in the Appendix*. Question Nos. 19-23, 25, 27-28, 32-36 and 38-43 have been postponed to the sitting of Parliament on 23rd November 2010.]

Mr Speaker, Sir, I would like to make a statement to the House in relation to Mas Selamat.

On 18th October this year, Deputy Prime Minister Wong informed this House of what Mas Selamat had said about how he got out of the Whitley Road Detention Centre (WRDC) on 27th February 2008. The account given by Mas Selamat was consistent with the findings of the Committee of Inquiry (COI).

CID investigations into what Mas Selamat did after he escaped from WRDC are still in progress. He has not been entirely forthcoming. He has changed his story several times. In some instances, whether his accounts are completely truthful cannot be fully verified. Today, I will update the House on the findings that the investigators have verified through independent corroboration.

Took shelter with brother's family

Mas Selamat escaped from WRDC on 27th February 2008. Two days later, on 29th February 2008, he made his way to his brother Asmom’s home in Tampines to

seek shelter and assistance from his grown-up niece, Nur Aini bte Asmom. Mas Selamat thought that Nur Aini was living alone. He believed that Asmom and his wife were living in their house in Johor while Asmom’s son (ie, Mas Selamat’s nephew), Mahadir, was overseas. Mas Selamat believed that it would be safe for him at Asmom’s house as only Nur Aini would be there and that she would render assistance to him. However, Asmom, his wife Aisah, their daughter Nur Aini and son Mahadir were all living in Asmom’s home. They have all independently admitted that Mas Selamat had stayed overnight in their home between 29th February and 1st March 2008. Asmom, Aisah and Nur Aini have also admitted that they had harboured Mas Selamat, providing him with shelter, food, money and clothes.

I will set out their respective roles in harbouring and aiding Mas Selamat on those two days.

Nur Aini

First, Nur Aini. Nur Aini had let Mas Selamat into the flat. Her mother, Aisah, had reservations about allowing Mas Selamat into the flat because by that time his escape two days earlier and fugitive status were very public. She knew that it was wrong to help him. Nur Aini, however, persuaded her mother to allow Mas Selamat to enter the flat. She gave him the use of her bedroom, provided him with food and water, and also assisted him by destroying material evidence, namely, the clothing he wore to the flat, which included his WRDC-issued attire.

On 1st March 2008, before Mas Selamat left the flat, Nur Aini applied make-up on Mas Selamat, secured a tudung (headscarf) over his head so that he could disguise himself as a woman to evade detection and recapture. She also gave him several items, which included a set of clothes to wear, a baseball cap,

water, snack, an illumination stick, air-tight re-sealable plastic bags to pack the items and a backpack which he used to store all these items. At Mas Selamat’s request, she also handed to him a map of Singapore that showed part of Malaysia.

Asmom

I will turn to Asmon now. Asmom jointly owned the flat with his wife Aisah. He found out about Mas Selamat’s presence in the flat when he returned from work in the early hours of 1st March 2008. He knew it was wrong to harbour Mas Selamat, was unhappy about Mas Selamat's presence but eventually decided to allow Mas Selamat to stay in his flat. Before Mas Selamat left the flat on 1st March 2008, Asmom gave him S$100 and RM100 to facilitate his escape from Singapore to Malaysia. He also gave Mas Selamat some traditional medicine which the latter kept in his backpack.

Aisah

Next, Aisah. Aisah is a joint-owner of the flat with Asmom. She was initially reluctant to allow Mas Selamat to enter the flat on 29th February. But she nevertheless subsequently went along and helped Mas Selamat. She gave him an EZ-link card and a hair-net which he wore as part of his disguise, and some paracetamol.

Mahadir

Finally, Mahadir. Mahadir had returned home to the flat on the night of 29th February. He became aware that his family members were harbouring Mas Selamat in their flat. He did not report the matter to the authorities. However, neither did he render any specific assistance to Mas Selamat, and nor was he in the flat most of the time when Mas Selamat was taking refuge in it.

The independent accounts of Mas Selamat, Asmom, Aisah, Nur Aini and Mahadir of what took place in Asmom’s flat and the assistance rendered to Mas Selamat are consistent.

Information still under investigation

As to how Mas Selamat made his way to Asmom’s flat and how he subsequently made his way to Malaysia, the account given by Mas Selamat is still subject to verification. It would, therefore, not be productive to set it out at this time.

Offence committed by Asmom and family

Asmom, Aisah and Nur Aini had knowingly harboured Mas Selamat, an escaped prisoner of the State, who they knew was the subject of a massive manhunt. Even after Mas Selamat left their flat on the evening of 1st March 2008, they did not reveal information concerning Mas Selamat to the authorities. On the contrary, they deliberately withheld the information when they were interviewed by the authorities on 3rd March 2008. It was only in October 2010, after being confronted with the facts, that Asmom, Aisah, Nur Aini and Mahadir admitted to what had happened. Asmom’s and his family’s decision to harbour Mas Selamat and provide him with material support that enabled him to escape to Malaysia was very wrong, illegal and had grave security implications.

Mas Selamat is a hardened and dangerous terrorist who has been involved in various plots by the Jemaah Islamiyah (JI) to mount terrorist attacks in Singapore since the 1990s. He is operationally trained and has undergone training not once but twice in Al-Qaeda camps in Afghanistan. After the Singapore authorities disrupted the Singapore JI network in December 2001 and averted the terrorist plot to conduct simultaneous truck bomb attacks in Singapore, Mas Selamat plotted to mount retaliatory

attacks against Singapore. Harbouring Mas Selamat and assisting him to escape from Singapore placed Singapore’s and Singaporeans’ security in serious jeopardy as Mas Selamat would thereby be able to resume his terrorist activities of attacking Singapore.

Criminal offence committed

The Government had stated in Parliament on 28th February 2008 that anyone who rendered assistance to Mas Selamat would be committing a "grave offence". Nur Aini, Asmom and Aisah were arrested and charged on 10th November 2010 under section 130 of the Penal Code for their roles in knowingly harbouring Mas Selamat, a prisoner of State. The three pleaded guilty to the charges and were convicted and sentenced on 18th November 2010. For their actions, Nur Aini, Asmom and Aisah have been sentenced to 18 months, 12 months and 3 months of imprisonment, respectively. Mahadir, who had a lesser role in the matter, has been served with a stern warning in lieu of prosecution.

Singaporeans will be undoubtedly disappointed that Asmom and his family had helped Mas Selamat in his escape. Their actions are, however, not a reflection on the wider Malay-Muslim community who had disapproved of Mas Selamat’s actions and participated in the manhunt for him in 2008. We should therefore not allow this episode to affect the trust and goodwill that has been built up over the years between our different communities. Instead, this episode should reinforce how important it is for every Singaporean to unite together and assist the security agencies to overcome the threat of terrorism from a small number of persons in our society.

*Cols. 1587-1596.

There will be no debate or speeches for this item, but the Minister has agreed to accept questions and clarifications.

Sir, there was a massive manhunt following Mas Selamat's escape. May I ask the Minister whether Mas Selamat's relatives or close associates were questioned or their homes placed under surveillance during this period?

Sir, investigations following Mas Selamat's escape from WRDC identified a loose network of friends, relatives and ex-JI associates. This totalled to a few hundred people, including Mas Selamat's own extended family which alone numbered more than a hundred. Investigations were conducted on all of them. Further actions were prioritised and pursued for those cases where there was necessity based on intelligence. For obvious operational security reasons, I cannot talk about who specifically were subjected to surveillance, who were not and what sort of surveillance was conducted.

Specifically to Asmom, Asmom and Mas Selamat had not been in contact for many years in the past. Asmom and his family had never visited Mas Selamat when he was in detention prior to his escape. Nevertheless, the Internal Security Department (ISD) interviewed Asmom and the interview took place on 3rd March, a few days after Asmom had given refuge to Mas Selamat in his home. Asmom failed to inform the authorities of his contact with Mas Selamat at the interview. At that point in time, there was no evidence or intelligence to warrant any further action against him.

There are certainly some racial sensitivities involved because there are implications that members who had helped him, whether it is from the family or not, were from the Muslim community. I have two points. One, based on the Ministry's findings so far, is the Ministry satisfied

that it is just confined to his family members? Two, given the fact that Mas Selamat also did escape in a tudung, according to the account by the Minister, will the Ministry assure the Malay community that there will not be unnecessary scrutiny on Malay women wearing tudung when they enter security areas or when they seek appointment, for example, for jobs, and other related movements in and out of Singapore.

Let me deal with the point on tudung first. As to whether someone is picked up for scrutiny, whether she is wearing a tudung or not, really depends on security assessment. It is difficult to answer these questions in vacuo. If that is an intelligence assessment – if there is a necessity to check – there will be a check. If there is no reason to check, then there will be none.

As to the broader question, the Government has consistently stated over the years that the actions of a few are not a reflection of the Malay/Muslim community as a whole. Our position remains unchanged. Over the years, the actions of the Malay/Muslim community have borne that out. They have been very supportive of our efforts to build a tolerant, united community and have consistently spoken out against violence in the name of any religion. There is no reason for employers, or anyone else, to shy away from employing members of the Muslim community or for anyone to use this incident as an excuse to target members of the Malay/Muslim community. And in the civil service, the recruitment policy is based on the system of meritocracy. I can state categorically that this incident will not affect the Government's recruitment policies. Employers in the private sector should similarly hire individuals based on that individual's suitability for the job.

As for whether there is any further evidence that people beyond this family are involved, we do not have any such specific evidence right now.

Mr Speaker, I would like to ask the Minister whether this incident would have any adverse impact on the state of communal relations in Singapore and what his Ministry would do to allay any anxiety that some communities may have.

To be specific, Dr Ong is referring to the anxieties of the Malay community.

Sir, I have made it clear that the three individuals committed a criminal offence of harbouring a prisoner of state. The threat Mas Selamat posed was a threat that was posed to Singapore as a whole and for all the communities in Singapore. His actions put all Singaporeans at risk. As such, all Singaporeans across the communities will feel disappointed with the actions of Asmom and his family. Their actions should not be projected on the Malay/Muslim community at large. I had said earlier that many members of the Malay/Muslim community assisted in the hunt for Mas Selamat in 2008. The general response of the Malay/Muslim community showed that they view Mas Selamat in the same way that other communities do. Therefore, we have to look at this harbouring of Mas Selamat by Asmom and his family in context, and we cannot allow the actions of these three persons to affect the state of communal relations, and the trust and goodwill that has been built up over many years between our various communities, especially between Muslim and non-Muslim communities. We will continue to emphasise the importance of good race relations for the security and progress of Singapore.

I would like to ask the Minister what efforts will be made

to extend rehabilitation services to those members of the Asmom family in terms of the Religious Rehabilitation Group's (RRG) efforts in this area as well.

Counselling services will be offered to them. And though there is no specific evidence of them being influenced by radical JI ideology, religious counselling will also be offered to them.

Sir, I was actually going to ask whether there will be any monitoring and counselling programmes for the family. I think that was asked by Mdm Halimah.

Mr Speaker, it is quite shocking to receive this news that Mas Selamat had actually been assisted by his extended family members, given the fact that all of Singapore were concerned during that period and the massive manhunt that took place. But I would like to first thank the Minister for being open and sharing this news on the case with us and I am sure the Minister will continue to share such pertinent information with Singaporeans.

I do have several questions that probably are in the minds of Singaporeans when they read the news tonight and tomorrow, specifically with regard to the family members. Firstly, were Asmom and his family members forthcoming when confronted with the evidence of this abetment of Mas Selamat's escape to Malaysia?

Secondly, given the seriousness and graveness of the offence, I just wonder whether the Minister feels that the punishment for the Asmom and his family members was too lenient. I think we have heard the Minister repeatedly mention that Mas Selamat is a prisoner of state. Imprisonments of 18 months and 12

months seem a little light, given the seriousness of the offence.

Thirdly, is regarding the daughter of Asmom, Nur Aini. Given her deepest involvement in harbouring Mas Selamat, I wonder if the Minister could give us some background about her and what she did, for us to have a sense as to why a person like her would make a decision to help and abet a prisoner of state and remain silent for the next two years before we got information on her.

Sir, when they were interviewed in March 2008, obviously they were not forthcoming. However, when confronted with the facts in October of this year, they independently verified and confirmed to having harboured Mas Selamat, and this was not only said to the interviewers. They made their statements to the magistrate who took down their statements and so it was independently verified and they were prepared to say those things to a magistrate. So, I do not know how to characterise it as whether they were forthcoming or not, but they were prepared to tell the truth when it was clear that the truth was out.

The second question that Dr Maliki had was whether the sentences were too light, given the seriousness of the offence. We have to remember one fact, which is that the sentences were meted out by the Court. They were based on submissions by both the prosecution and the defence, and the sentences, in our view, reflect the different degrees of involvement of the family in harbouring and aiding Mas Selamat. Nur Aini was obviously the most culpable. She has been given the longest jail sentence. The other two received shorter sentences probably because of their lesser involvement. The Court is likely to have given weight to the fact that the assistance was not premeditated. Rather, the three persons appeared to have acted

on misguided instincts of family ties on the spur of the moment. Aisah was reluctant to let Mas Selamat in. She is a housewife who was persuaded by Nur Aini, and it appears that Asmom may also have been initially unhappy about Mas Selamat being in the flat though he allowed Mas Selamat to stay. But having said that, they did commit a serious offence and have thus been given custodial sentences. Mahadir was issued with a stern warning in lieu of prosecution. He had not reported to the authorities that Mas Selamat was in his family's flat. But unlike the others, he also did not render any specific assistance to Mas Selamat and was not in the flat most of the time when Mas Selamat was taking refuge in it. His culpability is less severe than the rest of the family.

Dr Maliki also wanted to know, being shocked by Nur Aini's conduct, what did she do and what was her background. At that time that she harboured Mas Selamat, Nur Aini was a trainee teacher. At the time of her arrest this year, she was working as a Malay Language teacher. There is, however, no indication that either she or her parents subscribed to the radical ideology held by Mas Selamat. They had failed to differentiate right from wrong when they decided to help Mas Selamat. They should have known better.

I thank the Minister for making the statement and for his clarifications. Like my colleague, Mr Hri Kumar, I am quite disturbed that given the fact that there cannot be that many immediate members of the family, on the day of the escape, should it not have been standard operating procedure for the security forces to actually go down to the homes of the immediate family members? I would imagine that is standard operating procedure. Would the Minister please comment?

Sir, let me start by saying that we are naturally disappointed that despite the intensive and massive effort made to track him down, Mas Selamat managed to slip through and to take shelter with Asmom and his family. That having been said, the Member will remember that I said that on Mas Selamat's side alone, excluding his wife's side, just taking into account his relatives, a loose network, numbered more than a hundred, and if you take into account contacts, they numbered many more. I do not want to go into details of when what was done or what surveillance was done because they are really operational security matters and it is not in the interests of our country for us to disclose these matters. However, the Member can be assured that what was done has been reviewed and I am satisfied that all the necessary steps were taken.

Could the Minister clarify whether the investigations thus far have uncovered evidence of a more formal support network for Mas Selamat or JI in Singapore. And, secondly, does the Minister consider that this episode has raised some lessons for investigative agencies for the future?

On the first question, there is no specific evidence of a larger support network for Mas Selamat in Singapore that continues to exist. However, I want to be very clear that we rule nothing out. We can only go on the basis of current evidence and current investigations and that is the best I can say on the basis of current investigations.

As to what lessons there are based on this episode, I think a number of statements had been made by Deputy Prime Minister Wong. The escape itself was obviously the focus. If I can summarise it, I think it was due to some oversight and complacency setting in at WRDC, and it is a point from which both ISD and the agencies have a lot of take-

aways and, as a result, many changes have been made and WRDC itself is a very different institution right now. I think the key take-away from all of this is, each time a lapse occurs, we analyse what happened and we are determined not to repeat it and also do not allow ourselves to be brought down by that. As a result, ISD redoubled its efforts to make sure that they recovered from the fact that Mas Selamat escaped, and that was why through their efforts, we were able to get him back, albeit also with the assistance of the Malaysian authorities. But ISD never doubted that they could get him back and they did so.

Without casting aspersions on the Police force which I have got the greatest respect for, the Minister mentioned that Mas Selamat had not been in contact with this family for a number of years or for quite sometime, and the fact that four persons had been able to maintain their cool, when they were interrogated shortly after they had let Mas Selamat out of their house, would have shown that perhaps the interrogation process had been perfunctory or because the manpower was stretched that less than competent officers had been deployed to get in touch with these people. So, I am just wondering whether or not this would be part of the review that will be in process as well as to what sort of officers must be deployed for criminals, especially people like Mas Selamat, if at all such a thing should happen again. I hope not.

I think Ms Lee is drawing pretty large conclusions from a fairly narrow statement made by me. But let us go to the nub of the question. I said Asmom had been interviewed on 3rd March 2008 and he did not disclose anything. And does it necessarily lead to the conclusions that Ms Lee has drawn – that the investigators were either not experienced, or how is it that they were

able to keep their cool and why is it that we were not able to get the fact that they had harboured Mas Selamat? Ms Lee is a lawyer and Members of the House will also appreciate that for there to be effective results out of an investigation, you get the best results when you know some of the facts and are able to corner the person.

I had pointed out in my statement that the intelligence at that point in time did not warrant us to take any other view, other than that what Asmom was saying was accurate. In October 2010, we knew more and it, therefore, enabled us to get a different result from the interviews that took place. It depends on what facts you have. Straight off, if you go and ask someone and they are prepared to lie through and through, it is not often easy and I think we should stop way short of talking about whether the investigative procedures were good or not good. But I can assure Ms Lee, not just in ISD but also in the Police force as a whole, we take the investigative process very seriously. Deputy Prime Minister Wong had started out a process where we train a cadre of investigative officers who are very skilled and who would be thoroughly professional. That is in the interests of everyone. That process is independently continuing and nothing here necessitates a review of that process.

Thank you, Mr Speaker. I would like to ask the Minister if this family had been on the radar of being counselled when Mas Selamat was first arrested, it took him two days, very deliberate planning, to make his way to Tampines to this family. So he must have read this family very well for him to go through with it, and even have that family coerced or otherwise cooperate with him. So I just want to want to know if this family was, in the first place, within our radar for counselling when he was first arrested.

There was no indication to us that this particular family was in any need of counselling. I think a better answer to the Member's question would be this: the Member had sort of assumed that Mas Selamat thought he would get help and deliberately made his way to this flat. I think in the Statement that I have made I pointed out that Mas Selamat thought that there would only be one person in the house, Nur Aini. That seems to have been his primary motive, not because he thought that the entire family would help him.

3.32 pm

"to provide for the registration of prescribed allied health professionals, for the protection of the health and safety of the public and for purposes connected therewith",

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 Women's Charter (Chapter 353 of the 2009 Revised Edition) and to make related amendments to the Central Provident Fund Act (Chapter 36 of the 2001 Revised Edition), the Children Development and Co-Savings Act (Chapter 38A of the 2002 Revised Edition) and the Guardianship of Infants Act (Chapter 122 of the 1985 Revised Edition)",

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

"to amend the Children and Young Persons Act (Chapter 38 of the 2001 Revised Edition)

and to make consequential amendments to the Criminal Procedure Code 2010 (Act 15 of 2010) and the Private Education Act 2009 (Act 21 of 2009)",

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

"to amend the Retirement Age Act (Chapter 274A of the 2000 Revised Edition), to provide for the re-employment of employees and to make consequential amendments to certain other written laws",

presented by the Minister for Manpower (Mr Gan Kim Yong); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Employment Agencies Act (Chapter 92 of the 1985 Revised Edition)",

presented by the Minister for Manpower (Mr Gan Kim Yong); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read.

3.36 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill will amend the Economic Expansion Incentives (Relief from Income Tax) Act, or the EEI Act in short. It will

put into effect three tax changes announced in previous Budget Statements. It will also make other technical changes to the Act. I will now describe each of the proposed amendments in turn.

Enhancement of Investment Allowance

The Bill extends the maximum period within which companies can qualify their fixed capital expenditure in hire-purchase transactions for Investment Allowance (IA) from five years to eight years. IA incentivises capital investments by companies by providing companies with additional capital allowances, for approved projects, that can be offset against their taxable incomes. Other than with specified exceptions, the legislation currently states that fixed capital expenditure must be incurred within a qualifying period of five years to be considered for IA. It has been assessed that it is not uncommon that companies, especially small and medium enterprises, carrying out fixed capital expenditure through hire-purchase transactions can do so over a hire-purchase period of up to eight years. Thus, to better meet the needs of companies, the maximum qualifying period for IA will be revised from five years to eight years for hire-purchase transactions. Clause 4 of the Bill amends Section 68 of the EEI Act to give legislative effect to this enhancement.

Inclusion of energy efficiency projects into IA scheme

The Bill also expands on the list of the qualifying activities for IA to include energy efficiency projects. As a small, open economy, Singapore is a price taker in the global energy market and will be subject to the upward trend in energy prices. Adopting more energy efficient means of production will help businesses

deal with rising energy costs. Energy efficiency is also an important component in our efforts to reduce national greenhouse gas emissions. However, high capital costs and long pay-back periods can discourage energy efficiency investments. This amendment, therefore, aims to encourage more investments in energy efficiency projects by companies in Singapore. Clause 3 of the Bill amends section 67 of the EEI Act to give legislative effect to this enhancement.

Renewal of IA for aircraft rotables

The IA incentive for aircraft rotables was introduced in 2004 to develop the Maintenance, Repair and Overhaul (MRO) sector for the aerospace industry. Aircraft rotables are replacement parts used in the maintenance, repair and overhaul of aircrafts. The incentive expired on 9th September 2009 and it has earlier been announced in Budget 2010 that the incentive will be renewed for another five years effective from 1st April 2010. Clause 3 of the Bill gives effect to this renewal.

Repealing obsolete incentives

Three incentives – the Export of Services Incentive, the Overseas Investment Incentive as well as the Research and Development and Intellectual Property Management Hub Incentive – have expired and will be repealed. These changes are reflected in clauses 2, 6 and 7 of the Bill.

Consequential amendments

Section 97(h) of the EEI Act now makes reference to "qualifying services" as defined in section 44(a) of the EEI Act which relates to the Export of Services Incentive. With the repeal of the Export of Services Incentive, section 97(h) therefore has to be amended to include in full the "qualifying services" presently

defined in section 44(a). Clause 5 of the Bill relates to this change. Mr Speaker, Sir, the proposed changes to the Economic Expansion Incentives Act seek to stimulate more economic activity in Singapore. These changes also reflect the Government’s commitment to monitor the effectiveness of our tax incentive regime and to keep it relevant as economic conditions change. Sir, I beg to move.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. – [Mr S Iswaran].

Bill considered in Committee; 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 4.00 pm.

Sitting accordingly suspended

at 3.42 pm until 4.00 pm.

Sitting resumed at 4.00 pm

Order for Second Reading read.

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

The Charities Act was last amended in 2006 and brought into effect on 1st March 2007.

Key aims of amendments

The Bill before this House today has three objectives:

First, to facilitate charities and charity board members in their work by providing clarity on their roles and responsibilities and to protect them from personal liability if they have acted honestly and in good faith. We hope this will encourage more good people to come forward and to contribute their time and resources to do good work for society.

Second, to enhance the accountability and governance in the charity sector. This will include establishing the legislative framework for putting in place accounting standards for charities and Institutes of Public Character (IPCs).

Third, and perhaps most important of all, to strengthen charity regulation to better protect donors and to maintain public confidence in the charity sector.

Sir, I would now like to draw the attention of the House to the main clauses in the Bill.

Protecting governing board members from personal liability

Our charity board members are doing beneficial work for society, and many of them are doing so without any remuneration. These board members should enjoy some degree of legal protection if they have acted honestly and responsibly in their charitable work.

The current Charities Act already provides a layer of protection. Proceedings against a charity or charity board members involving issues related to breaches of trust would require the Commissioner’s authorisation. In general, these proceedings will not be authorised if a case can be dealt with using the powers

under the Charities Act. This helps avoid the need for the charity and its board members to become embroiled in Court proceedings if there is a better, less expensive and more practical alternative. In addition, the Courts have broad powers to strike out frivolous or vexatious cases, including those made against charities and their board members.

To provide another layer of protection, clause 15 inserts a new section 32A to apply protection currently available under various other Acts to all charity board members under the Charities Act. If the Court finds that a charity board member has acted honestly and reasonably and, having regard to all the circumstances of the case, that he should fairly be excused for negligence, default or a breach of duty, then the Court may relieve him either wholly or partly from his liability on such terms as the Court thinks fit.

These existing provisions in the Charities Act, along with the new section 32A, will help provide greater assurance to existing board members, so that they will continue to serve in the charity sector without impediment or reservation. It will also send a positive signal to potential board members and, hopefully, encourage capable and well-meaning individuals to step forth and serve on charity boards.

Clarifying roles and responsibilities of charity board members

We also intend to clarify some of the terms used in the Charities Act. Currently, some of the terms used may not be easily understood by the charity sector. For example, the existing Act defines the term "charity trustees" as persons having the general control and management of the administration of a charity. This term includes volunteers serving on the charity board as well as key officers and employees of the charity, which is different from the definition of

"trustees" used under the Trustees Act. In addition, under the Charities Act, the term "trusts" means the provisions that establish and regulate the purpose and administration of a charity. Again, the same term has different meanings under the Trustees Act. To reduce the possibility of confusion, various clauses of the Bill, including clauses 2, 9 to 14 and 23, replace the term "charity trustees" with "governing board members", and the term "trusts" is replaced with "governing instruments". The term "key officers" is also included where applicable, to clarify the roles and responsibilities of board members and key officers.

We also want to streamline our administrative requirements to facilitate the charities’ operations. Currently, most charities have a provision in their governing instruments stating that the Commissioner’s approval is required before amendments are made to their governing instruments. In the event that the Commissioner chooses to delegate this power to the Sector Administrator, clause 3 aligns the governing instrument provision with the delegation so as to allow the Sector Administrator to approve these amendments. This allows charities to approach a single agency, which will usually be their Sector Administrator, for their general charity administrative needs.

Accounting standards and audit requirements

We will also be establishing the legislative framework on accounting standards for charities. The Accounting Standards Council (ASC) was established in 2007 under the Accounting Standards Act to issue accounting standards for companies, charities, co-operatives and societies. The ASC has developed the Charities Accounting Standard which is tailored specifically for the charity sector. While the Singapore Financial Reporting Standards (SFRS) remain relevant for some of the bigger charities, the Charities

Accounting Standard will simplify the accounting needs of smaller charities. Over the longer term, it will also increase the level of transparency, comparability and accountability in the financial reporting of charities in Singapore.

Clause 6 of the Bill allows us to put in place the regulatory framework on accounting standards for charities and IPCs, so that we can be ready when the Charities Accounting Standard is launched next year. This clause will also allow us to coordinate the requirements under the Charities Act and the Companies Act. For instance, while charities which are registered as companies will be allowed to choose between the Charities Accounting Standard and the SFRS in future, the penalty for non-compliance with the accounting standards will be similar to that under both the Companies Act and the Charities Act.

At this juncture, I should also mention that I will be moving a Notice of Amendment shortly after this in the Committee stage. The Amendment will allow us to align our penalty with the Companies Act, specifically for offences relating to non-compliance with accounting standards and which are committed with intent to defraud.

Here, I would like to assure Members that we have no intention of introducing overly stringent requirements that will unduly inconvenience charities. As a start, only the larger IPCs and charities which are registered as companies will be affected. Today, these IPCs and charities already have to comply with an established accounting standard. In fact, they will be able to enjoy greater flexibility by being able to choose between the Charities Accounting Standard and the SFRS depending on which is more relevant.

Imposing basic requirements on exempt charities

Sir, under clauses 6 and 7, we will require exempt charities to keep their accounting records for at least five years, and to submit their annual reports and statements of accounts to the Commissioner every year. There are currently about 140 exempt charities. These are mainly educational institutions, hospitals or religious bodies established by an Act of Parliament or institutions that have been declared to be exempt charities under a Notification Order. These exempt charities enjoy the same income and property tax exemption as registered charities. The changes mentioned above will bring them in line with the other registered charities and encourage greater transparency and public accountability in the charity sector.

Protecting donors and the public

At the same time, we will enhance protection to donors and the public, so as to maintain a high level of public confidence in the charity sector.

Sir, Part VII of the Charities Act on "Control of Fund-raising for Charitable Institutions" was not brought into force previously as it was deemed that the phenomenon of commercial fund-raisers and commercial participators was rare. However, over the past few years, the Office of the Commissioner has seen an increase in the number of complaints on the conduct of fund-raising appeals by commercial fund-raisers. Clause 16 will repeal Part VII, which is based on the 1992 UK Charities Act. We will, instead, be incorporating its provisions into our regulations in order to strengthen our existing protection for charities and donors, and to give us more flexibility in updating them as and when necessary, according to the considerations and requirements of the charity sector and the demands of the donating public. These

provisions will require the commercial fund-raiser or commercial participator to sign an agreement with a charity before embarking on the fund-raising exercise. The agreement has to spell out arrangements such as the fund-raiser’s remuneration and the time period within which collected donations have to be handed over to the charity. The provisions will also, under certain specified conditions, allow donors to cancel their payments to commercial fund-raisers or participators.

In addition, clause 19 will empower the Commissioner to require fund-raisers to furnish information required for investigations, which are conducted, for example, in response to public complaints. At the moment, the Commissioner’s powers to call for documents and search records under section 9 of the Charities Act can only be exercised on documents or records that relate specifically to a charity.

Holding out as registered charity or IPC

We also want to deter the unscrupulous from using the good name of charities and IPCs to gain credibility and support from the public. Clause 21 inserts a new section to penalise institutions which mis-represent themselves as registered charities or IPCs, or persons acting or purporting to act for the institutions, such as their fund-raisers. This will deter them from attempting to mislead the public by pretending to be a charity or IPC.

Sir, let me conclude by stating that the charity sector is an integral part of our Government’s "Many Helping Hands" approach. The charity sector plays a very important role in serving the beneficial interest of the community at large. And the Government is therefore fully committed to promoting the growth of the charity sector and we will do so by adopting a facilitative and balanced

regulatory framework, which enhances public confidence without stifling volunteerism and the good work that is already being performed by the charity sector. The amendments we are making to the Act will improve the transparency of the sector and above all, ensure that donors, volunteers and the general public are protected, so that they can continue to donate and to support the charity sector with confidence.

Sir, I beg to move.

Question proposed.

4.11 pm

(In Malay): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, firstly, let me say that the clarification and alteration of certain terms used is indeed a welcome change. It will certainly reduce the misinterpretation of definitions within this Bill.

Out of the 140 charitable bodies that were mentioned by the Minister, I would like to ask, Sir, if many of these organisations are large charities and what is the definition of "exempt charities".

Clause 15 inserts a new section 32A where board members are granted relief from personal liability after the proper investigations have been carried out – I am sure many will welcome this.

Many people are invited to sit on the boards of organisations related to the charity sector because of their commitment, track record and capabilities. Board members may not necessarily be involved in the day-to-day operations of the charities which they join. Hence, this is an appropriate change.

This is also in line with the Trustees Act (under the Companies Act) and the Business Trust Act. This Act should send

a message to everyone that even though we implement measures to tighten the regulations but, at the same time, some flexibility with a light touch approach is still required in certain situations.

Sir, can I suggest that there be a roving panel of financial advisers? Charities can call and ask them for advice if they run into issues, especially financial issues. Maybe these financial advisers can be tapped upon for help before problems arise in areas of finance or accounting. This will build a solid defensive barrier for the welfare bodies and, furthermore, the charity sector in its own may lack sufficient trained personnel to perform such duties professionally.

In all, Mr Speaker, I support this Bill.

*Cols. 1623-1624.

4.14 pm

Mr Speaker, Sir, firstly, I would like to declare my interest as the Chairman of the Singapore Chinese Chamber of Commerce Foundation.

Given the few high profile charity mismanagement in the last few years, this is indeed a timely reminder of the fallibility of humans and the temptations in the handling of public funds. I realise that there will never be a perfect solution as the system can always be outsmarted. However, having the necessary safeguards in place will go a long way towards restoring the trust and confidence of the public. The survival of charities is dependent on public generosity.

There is now an increased support in charitable giving. This is clearly shown in the latest annual report by the Commissioner of Charities. Despite the downturn last year, the report revealed an increase in individual donations in the charity sector.

As the fund-raising field

shapes up to be more competitive, it is inevitable that organisers will seek ways to boost exposure, which include television extravaganzas and mass participation events, so as to capture a slice of the growing pie.

Given the expected increase in the flow of funds to charities, the measures introduced to deliver more teeth to the Charities Act will send a strong signal that systemic weakness will not be condoned while lifting corporate governance in this sector. Greater transparency will also go a long way towards assuring the public that donations, both in cash and kind, are properly accounted for. However, I would like to recommend two areas that could further improve the internal financial controls of charities.

Take as an example financial supervision for Board of Directors of Charities. The current Code of Governance for Charities states that the positions of Treasurer and Audit/Finance Committee Chairmen on the Board of Directors should preferably possess recognised accounting qualifications and appropriate practical experience. As a Best Practice Guideline, the Code of Governance is not for legal compliance. Charities are encouraged to adopt the guidelines. As such, not all charities may adopt this guideline. Such guidelines are probably even more crucial for large charities.

Perhaps, the Charities Act or the Code of Governance could be more explicit to ensure that more charities, especially the larger ones, adopt these guidelines. Given their knowledge, experience and skills, accounting and finance professionals can assist the Board to oversee the financial management and internal control systems of the charity unit.

Another suggestion is on the financial management in large charities and IPCs. Should there be a requirement under the

Charities Act, or a guideline under the Code of Governance, that a Financial Director or Manager has to be a qualified Certified Public Accountant (CPA), or someone with similar recognised academic and professional qualifications, to be employed by large-sized charities? This will ensure that a suitably qualified professional can formulate and implement the necessary financial and accounting policies as well as establish internal control systems for the charity unit.

A large-sized charity unit could also be encouraged to set up an internal audit department to regularly review the policies and internal control systems. Small charities, however, may find this difficult due to their limited resources and maybe some form of assistance could be offered to them.

The newly introduced measures in this Bill, coupled with the current enhanced tax deduction incentives for donations, will contribute towards the Government's vision of developing Singapore as a philanthropy hub.

In conclusion, I support the Bill.

Mr Speaker, Sir, I would like to thank Assoc. Prof. Fatimah Lateef and Mr Teo for their support of the Bill and, perhaps even more important, for their very astute observations on the necessity for greater professionalism and greater supervision, and oversight of the charity sector.

We have 2,000 registered charities in Singapore, and the number is growing. And these 2,000 charities are also a very heterogeneous group – there are some very large and very capable charities, and also some very small charities. So I am sure that the two Members would appreciate that in our legislative and regulatory framework, we have to take into account this very diverse landscape.

Mr Teo suggested making it compulsory for the positions of the Treasurer and, I believe, the Audit and Finance Chairmen on the Board of Directors to preferably possess recognised accounting qualifications and appropriate practical experience. I think this is ideal in an ideal world. He also suggested requiring the larger-sized charities to employ a Financial Director or Manager who is a qualified Certified Public Accountant (CPA), or has similar professional academic qualifications. I agree that these are important considerations and it would indeed be helpful if we had people like these available in order to help exercise appropriate control over the financial matters of charities, particularly the larger ones and those which have been granted IPC (Institution of a Public Character) status, which allows them to issue tax-deductible receipts for donations made to them. The accounts of such charities and IPCs are currently already required by current Statutes to be audited externally by a public accountant. In addition, the IPCs are also required to post their financial statements online. And this provides some level of assurance in the financial management and the transparency of the charities and IPCs concerned.

Charities will also have to ensure that they have suitably qualified board members, particularly those who are holding key appointments, as Mr Teo has suggested, like Treasurers and Chairmen of Finance and Audit Committees. Whilst the Code of Governance is not mandatory, across the board for everyone, the system is one in which charities and IPCs will have to explain if they are unable to comply with the Code of Governance. This creates a situation where certainly the larger charities and those with larger income streams will find it almost impossible to justify why they do not have qualified staff or qualified board members serving in the management of the committees. On the other hand, we

also have to make room for smaller charities or start-up charities, for whom access to such highly qualified and, if I may add, sometimes expensive management staff will not be available to them. So for the smaller charities, where smaller amounts of money have been raised and, in a sense, there is a lower level of risks, we will allow them to deviate sometimes from the Code of Governance but to explain and to be transparent about these deviations. So this provides for a more flexible regulatory framework, a more risk-based and more stratified regulatory environment.

Ultimately what we are trying to do is to create a situation which there is more self-regulation. And as a regulator, we have to be very mindful not to overload the charities with such onerous demands that the cost of compliance becomes very high. The cost of compliance for a large charity, if you spread out the cost of getting professionals, may be a tiny fraction – a small percentage of their overall revenues. But in a small charity, this will become a not-insignificant proportion of their expenditures. And I am sure Members of this House and, indeed, members of the public who donate to charities will not want to see a significant proportion of their donations expended on administrative costs. So I need to persuade Members that we cannot have one-size-fits-all, and we need instead to have the flexibility to regulate different size charities with different risk profiles in an appropriate manner.

We acknowledge also the fact that even small charities should have access to professional manpower, and that is why we have launched the programme in which the smaller charities can outsource and seek shared services from professionals. In this way, we will ensure first that there are independent outsiders who are managing and auditing and

overseeing the accounts. Secondly, by having shared services you reduce the unit cost of having such qualified people. In that way, we are trying to create a win-win situation where you can have greater confidence in the veracity and integrity of the accounts of even a small charity without unnecessarily inflating the cost of compliance.

Sir, in conclusion, I would like to reiterate our commitment to promoting the growth of the charity sector. We will do so by adopting a facilitative and balanced and flexible regulatory framework, which will enhance public confidence without stifling the spirit of volunteerism, charity and philanthropy, which is really the lifeblood of this sector.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House.

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

Bill considered in Committee.

Clauses 1 to 5 inclusive ordered to stand part of the Bill.

Clause 6 –

Clause 6. Dr Balakrishnan.

My Speaker, Sir, I beg to move,

In page 5, line 5: after "204(1)", to insert "or (3)(a), as the case may be,".

As I alluded to in my speech earlier, this amendment will allow us to align our penalty with the Companies Act, specifically for offences relating to non-

compliance with accounting standards and which are committed with the intent to defraud.

Amendment agreed to.

Clause 6, as amended, ordered to stand part of the Bill.

Clauses 7 to 25 inclusive ordered to stand part of the Bill.

Bill reported with an amendment, read a Third time and passed.

Order for Second Reading read.

4.28 pm

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

Sir, this Bill seeks to amend the Civil Defence Act (CDA) in three main areas. They are, first, to update the functions of the Singapore Civil Defence Force (SCDF) to include the additional responsibility of handling Chemical-Biological-Radiological-Explosive (CBRE) threats; second, to provide a legal framework for SCDF to extend humanitarian assistance and disaster relief overseas; and third, to update the provisions relating to the discipline and administration of the Force. I will go through each in turn.

Updating of functions

Sir, the CDA was enacted in 1986 to provide for the raising, maintenance and discipline of a civil defence force and for the exercise of the functions and powers of the force during national emergencies. This is the first time the Act is being substantially amended.

Evolving security landscape and SCDF’s new CBRE roles

SCDF started off primarily providing fire-fighting, rescue and emergency ambulance services in the 1980s. The security landscape has since evolved significantly. The rapid growth of the petro-chemical industry on Jurong Island and the heightened post-911 security climate has raised new challenges in the form of unconventional CBRE threats and industrial accidents. Hence, from providing fire fighting and emergency ambulance services, SCDF’s responsibilities have expanded to include managing emergency disasters such as industrial accidents, CBRE threats as well as preparing the population for such emergencies.

The SCDF has been appointed the Incident Manager to mitigate the consequences of a CBRE incident. To better perform this role, since 2004, the SCDF has been beefing up its "dirty bomb" response capabilities. SCDF first responders to a dirty bomb incident have been equipped with radiation detectors to check for and identify on-site radiation contamination. Besides conducting rescue and evacuation, the SCDF Special Rescue Battalion is also equipped to perform radiological decontamination of victims.

To address SCDF’s enlarged role, clause 2(a) amends section 2 to expand the definition of "civil defence emergency" to include a "hazardous materials" incident. A definition of hazardous materials is also included and the Minister may add to the hazardous materials list any dangerous article or substance he considers necessary by Gazette.

Deletion of obsolete force functions

Sir, even as SCDF’s core responsibilities have grown, there are functions previously undertaken by SCDF in a National Emergency scenario that SCDF

no longer undertakes.

These functions include assisting public authorities such as the Building Control Authority, Public Utilities Board, Land Transport Authority and MCYS in the clearance of streets, roads and other public places; the disposal of dangerous structures and materials; the repair of essential utilities and Government buildings and the control of writing and distribution of freshwater and other essential supplies. We intend therefore to delete these functions from section 4 of the Act.

Legal framework for overseas deployment

Sir, let me now deal with the provisions for overseas deployment of SCDF. Clause 22 introduces a new Part XIIIA on "Service Outside Singapore" under section 105A to 105D of the Act to facilitate the sending of SCDF officers overseas in response to Civil Defence emergency when such request is made by UN agency or by government or a territory outside Singapore. This can also be in connection with any agreement or arrangement with another country. This amendment is timely, Sir, as SCDF has increasingly been involved in extending humanitarian assistance and disaster relief overseas in recent years.

What is new about these provisions is that they will specify that SCDF officers deployed overseas remain subject to the Civil Defence Act. So, for instance, an offence allegedly committed by a Force member during overseas service would be treated as if it was committed locally, even if it does not constitute an offence under the laws of the territory where the offence took place. These provisions are adapted from the Police Force Act.

Since its Operation Lionheart contingent was formed in 1990, SCDF has responded to 11 overseas missions. Indeed, in January 2008, SCDF was

internationally recognised for its operational capability in complex search and rescue operations and it became the first in Asia and the seventh in the world to be endorsed as a Heavy Urban Search and Rescue team by the International Search and Rescue Advisory Group (INSARAG). We also ratified the ASEAN Agreement on Disaster Management and Emergency Response (AADMER) in December 2008.

Discipline and administration of the Force

Sir, lastly, let me now turn to the final cluster of amendments relating to matters of discipline and administration. The changes are essentially administrative in nature and will enable the SCDF to better manage its members.

Timebar for disciplinary actions

First, clause 9 amends section 19 to lengthen the time-bar for trial of Full-Time National Serviceman (NSFs), Operationally Ready National Serviceman (ORNSmen) and SCDF auxiliary members by a disciplinary officer for a service offence, except for desertion and absence without leave, from the current six months to three years. This will allow SCDF to deal more effectively with service offences, which are discovered after six months. This amendment will align SCDF's practice to that of the SAF's.

Absence without leave

Next, to also align with the SAF Act, clause 12 amends section 48 to provide that a person charged for being Absent Without Leave can raise in defence, that his absence was a result of circumstances over which he had no control.

Fines and compensation

As general allowances of our National Servicemen have increased, clause 14 amends section 75 to increase the

maximum fine quanta for servicemen from $100 to $300 and for officers from $300 to $1,000. In addition, the maximum compensation liable by an errant Force member to another member who has suffered bodily injury, damage or any loss will be similarly increased from $100 to $300. Further, the detention period in default of fines has been increased to 30 days from 20 days, if the fine exceeds $100 but not more than $300 under clause 17. These amounts are derived from similar provisions under the SAF Act.

Clause 15 amends section 81(1) to allow civilian officers in the legal profession to be appointed as the reviewing authority for disciplinary cases. This will allow a public legal officer who is not an officer of the Force to serve as a reviewing authority.

Service offences

Sir, the Bill also proposes a few amendments to service offences. For example, the irrecoverable loss of service property would be classified as a service offence. Examples of such service property would include equipment such as walkie-talkies or laptops, issued to officers as part of the daily duties. In addition, falsification of service documents will be expanded to include documents in the form of electronic records.

New ranks, appointment and definition of members

We have also created the new ranks of "Senior Assistant Commissioner" and "Senior Warrant Officer" for senior officers and servicemen respectively. In addition, a "Provost Officer" now must be specifically appointed by the Commissioner as there may be other officers serving in SCDF's provost unit in administrative positions. In addition, the definition of "members" under the Act will be expanded to include auxiliary members, in

addition to serving officers and servicemen.

Issuance of identity cards

Sir, the issuance of identity cards will also be restricted only to Full-Time National Servicemen, as regular officers already have public service and warrant cards to identify themselves during operations.

In summary, Sir, let me say that SCDF is committed to staying ahead of new security threats, building new capabilities in emergency and disaster response and training and upgrading its members so that Singapore remains safe and secure.

Sir, I beg to move.

Question proposed.

4.35 pm

Mr Speaker, thank you for allowing me to speak on the Bill. The Civil Defence is indeed a very important component of our National Total Defence movement.

I am glad to see the addition of the management and handling of hazardous materials being added on. This is important with industrialisation, with the types of chemical manufacturing industries we have engaged in as well as the global terror climate we live in today. Preparedness and knowledge of personal protection cannot be underestimated. We have seen how SCDF teams and staff performed under the circumstances of epidemics such as SARS and the H1N1 outbreaks, where they put these principles into practice. Formally adopting this in the Bill, I feel, is a necessary move and I support it.

Pertaining to the substitution of the new paragraphs on effective coordination between SCDF and other emergency services, this is indeed essential. In fact, this has been put to practice in some of

the multi-agency exercises that have been carried out. A very good example would be the Exercise North Star, with counter-terrorism measures incorporated. SCDF has always been a major player and will continue to do so.

The coming together under crisis situations allows members to understand coordination as well as field and ground issues well. Will there be more such multi-agency, multi-disciplinary exercises planned?

On the deployment of SCDF officers overseas, Sir, I have had the opportunity and privilege of working side by side with many of them in many different settings and countries around the world and I have to say that I am impressed by the level of professionalism, attitude and teamwork as well as camaraderie.

Pertaining to the amendment to section 4(k), ie, to provide and maintain an adaptive emergency ambulance service, can I ask the Minister the following questions? Are there future plans to expand the SCDF fleet of ambulances? Secondly, will the Advanced Specialist Paramedic Training Course, which has been stopped temporarily, be continued in the near future? This is indeed an important component in the training and specialisation of our paramedics and is a step in the right direction, especially in a climate of increasing expectations of their performance on the ground. It is also something that provides a career path and a vision to aspire to for the passionate paramedic.

With that Sir, I support the Civil Defence (Amendment) Bill.

4.38 pm

Mr Speaker, Sir, I thank Assoc. Prof. Fatimah Lateef for speaking in support of the Bill. She

asked if there would be more exercises in future, in the same vein, as Exercise NorthStar. Sir, the answer is "yes", as these exercises, as she has said, have proven very useful. SCDF started Exercise NorthStar in 1997 to validate the contingency plans of participating agencies and to ensure sound integrated response amongst all these agencies in the event of a civil emergency. To date, we have conducted seven Exercise NorthStars, each with a different focus but with the same purpose of validating operational readiness and preparedness on the part of key agencies. Indeed, SCDF is now preparing for Exercise NorthStar VIII, which is to be conducted next year.

Assoc. Prof. Fatimah Lateef also asked if there are plans to expand SCDF's fleet of emergency ambulances. Sir, the SCDF currently has a fleet of 40 emergency ambulances of which 36 are operational during the day and 30 at night after 9 pm. In June last year, SCDF engaged two private service providers to supplement its current fleet of emergency ambulances with an additional five ambulances per operator. These private ambulances are stationed at SCDF's fire stations during peak periods.

Sir, together, all these ambulances handled about 116,000 emergency cases last year, up from 105,000 in 2007. On average, about 70% of these are medical cases and 30% are trauma cases. Handling about 10% of the cases, the assessment of the private emergency ambulances is that they have done well. Indeed, this has enabled the SCDF to concentrate on its core functions, such as fire-fighting and rescue as well as strengthening its emergency preparedness and counter-terrorism roles.

In this regard, I thank Assoc. Prof. Fatimah Lateef for her endorsement of how SCDF officers rose to the challenge in meeting the SARS and H1N1 outbreaks. She is absolutely correct when

she says that preparedness and knowledge of personal protection can never be underestimated. And these principles underscore the amendments to enable the SCDF to discharge its Chemical, Biological Radiological and Explosive (CBRE) responsibilities. We will continue to monitor the performance of the private emergency ambulances in conjunction with the overall need to expand emergency ambulance services in Singapore in light of Singapore's ageing population before deciding whether to add to their fleet.

Assoc. Prof. Fatimah Lateef also asked about the Advanced Paramedics Specialist Training Course (APSC). Sir, the APSC was introduced in 2006. They equip paramedics with advanced life-support skills and knowledge. It has modules on advanced medical and trauma protocols, such as advanced airway management and interpreting electro-cardiogram rhythms. SCDF is currently conducting a review of the effectiveness and relevance of the APSC for its paramedics in their daily work and I will take on board Assoc. Prof. Fatimah's feedback because I believe that she was one of the course instructors. I understand that the review is scheduled to be completed in the next work year. Pending the review, SCDF has decided to temporarily stop conducting the course.

Nevertheless, I would assure Assoc. Prof. Fatimah Lateef that SCDF's paramedics continue to be rigorously trained and further equipped to handle all medical and trauma emergencies encountered in their daily work through the current Paramedics Specialist Course. In addition, SCDF conducts regular audits and assessments to ensure that both SCDF and the private operators paramedics are au fait with operating procedures and protocols in handling such emergencies. SCDF has given me the assurance that it would not hesitate to mandate additional training or even

remove any paramedic who has been found wanting from his duties.

Question put, and agreed to.

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

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

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

Order for Second Reading read.

4.43 pm

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

The Residential Property Act (RPA) restricts foreign ownership of landed residential properties, including strata landed housing and land meant for residential development. We generally call them Restricted Properties.

In Singapore, only citizens have the right to own landed residential properties. In addition, Permanent Residents who make significant economic contribution, can, with the approval under the RPA, purchase such properties for their own occupation.

Foreign developers who wish to purchase land for residential development, other than from the Government, must also apply for approval under the RPA. Those who are granted approval are required to develop and sell the residential units in a timely manner.

We now seek to amend the Residential Property Act to make changes to the penalty provisions as well as other amendments to improve the administrative efficacy of the RPA. I will highlight the key amendments.

Foreign developers – Introduction of a new extension charge framework

The first group of key amendments relates to foreign developers who are given approval under the RPA to acquire or retain land for residential development. They are required to complete their residential development within a stipulated Project Completion Period, which is currently five years. They are then required to sell off all units in the residential development within two years from the issue of the Temporary Occupation Permit (TOP). This is to prevent them from hoarding or speculating in residential land. If they fail to meet the stipulated timelines, we may forfeit their Banker’s Guarantee, which is pegged at 10% of the land price.

With the amendments, the Controller of residential property will be empowered to levy an extension charge for any extension of time beyond the project completion period. The extension charge framework is essentially the same as the extension premium scheme that applies to the sale of sites under the Government Land Sales programme today. The key advantage of the extension charge framework is to make the cost of delay apparent to the developers and encourage them to complete the developments in a timely manner.

We will apply the same penalty regime and extension charge framework to Singapore entities which are given approval to convert to foreign entities and to retain their residential land for development and sale as well as to

foreign entities that have been granted approval to change the use of their land to residential use on the basis that they will develop the land and sell the units.

Purchase of individual restricted properties for owner occupation – Fine-tuning the penalty provisions

The second group of amendments relates to the penalties for offences relating to foreign ownership of individual restricted properties will be enhanced. Today, permanent residents can apply to purchase restricted properties. To prevent speculation in such properties, approved purchasers are allowed to purchase only one property, which cannot be sold within the initial period, currently three years. Approved purchasers are also required to use the property for their own occupation and are not allowed to rent the property out. Owners who breach these conditions are subject to criminal penalties under the RPA, which have not been updated since 1973.

These penalties will be revised to ensure that they continue to be an effective deterrent. Foreign owners who illegally dispose of their property during the non-disposal period are currently liable, upon conviction, to a maximum fine of $5,000. This is far below the amount of profit they might have gained from speculating in the property. We will raise the fine to a maximum of $200,000. As an additional safeguard, the Controller of residential property will be empowered to lodge a caveat on restricted properties purchased pursuant to an approval granted under the RPA. The approval to purchase is granted to selected foreigners on condition that there is no early disposal of the property and a caveat will prevent such unauthorised disposal.

There are other offences where sanctions have to be made commensurate with the severity of the offence. For example, if foreign owner who rents out

his residential property without approval will now face a financial penalty of up to three times the rental income earned over the period of breach, or $10,000, whichever is higher. We will remove the current criminal sanction, as that may not be appropriate.

Overall, the revised penalties will allow us to take a more calibrated and effective approach in the enforcement of the RPA.

Requiring ex-Singapore citizens and ex-Permanent Residents to dispose of their restricted properties

The final group of key amendments deals with the disposal of restricted properties belonging to ex-Singapore citizens and ex-Permanent Residents (PRs), and to foreign persons beneficially entitled to restricted properties through inheritance. Our policy is that only foreigners who are PRs and who have been given specific approval under the RPA can own restricted properties. Foreign beneficiaries who inherit such properties and Singapore citizens and PRs who renounce or lose their citizenship or permanent residency, must dispose of their interests in the properties in a timely manner.

Currently, the executors or administrators have 10 years to dispose of the foreign beneficiaries’ interest in a restricted property if the beneficiaries do not qualify for approval under the RPA. As the estate administration process has been simplified with the abolishment of estate duty in 2008, we will shorten the disposal period to five years.

We will now also require individuals who renounce or lose their Singapore ctizenship or permanent residency to dispose of their restricted properties. The amendment will address the current anomaly in our laws whereby an ex-Singaporean or ex-PR can continue to hold on to their restricted properties.

Sir, I beg to move.

Question proposed.

4.50 pm

Mr Speaker, Sir, I would like to focus on three issues in the Residential Property (Amendment) Bill.

On individuals who give up their Singaporean citizenship or PR status, Sir, I understand that it is fair that ex-Singaporeans should be treated just like foreigners and they will no longer be entitled to property ownership in a land-scarce country like Singapore. This is in line with the Government’s intention to continually emphasise that the status of a Singaporean citizenship is a matter of honour and pride and comes with many privileges. We must constantly show that Singaporeans come first, especially on matters pertaining to property and housing. I would like to raise some suggestions for consideration.

First, in recent years, more and more Singaporeans are venturing to live and work abroad in major cities in the world, such as Shanghai and London. Many local firms also have partnerships and overseas offices in these major cities. Prime Minister Lee Hsien Loong, during his US trip in April 2010, called upon overseas Singaporeans to return to help in the country’s next phase of development. Just as Singapore seeks out foreign talents to take root in Singapore, overseas Singaporeans are also being courted by these overseas’ local authorities to sink their roots in these countries. The proposed measure will force Singaporeans, especially those on the brink of giving up their citizenship to rethink their decision.

In the interim two years, what other softer approach are we considering to convince them to stay? Would the

Government be prepared to carry out an exit interview to find out the reasons why Singaporeans are leaving the country and take the opportunity clarify these people’s misgivings. Managing the exit of Singaporeans is no different from managing attrition in a company. We need to take stock.

Sir, on inheritance, the reduction from 10 years to five years serves as a stern deterrence. The question is: how do we leverage this stern measure to woo ex-Singaporeans to return? The very fact that they are named as beneficiaries signals the desire of their benefactors to keep the ties with them with Singapore. Would the Ministry consider the five-year period as a general rule, but grant flexibility on a case-by-case basis when there is strong evidence that we can win over the ex-Singaporeans to return?

Sir, the other significant change is the tightening of rules for foreign property developers. Currently, the RPA mandates that foreign housing developers must complete residential developments within five years. They must also sell all units within two years from the time the project receives its Temporary Occupation Permit. With this Bill, the Ministry of Law is now proposing that developers who fail to complete and sell their developments within the stipulated period will be subject to a new extension charge framework where they will pay for the extension of time beyond the original completion framework.

Sir, I would like to commend the Ministry for introducing such a measure as this will deter foreign property developers from hoarding some units for speculation. Singapore’s property market underwent several speculative bubbles and the Government’s latest cooling measures are meant to prevent overheating in the property market.

Sir, I would like to seek a clarification at this point. Will this new measure also apply to local property developers? If the intention of this new measure is to address the issue of speculative bubbles in the property market, this new measure should equally apply to both foreign and local property developers because the latter is also capable of playing the property market.

On this note, I support the Bill.

4.54 pm

I rise in support of the Bill.

Property is a sensitive, sometimes emotional, subject among Singaporeans, primarily because of how much it costs, how it can create enormous wealth and how ownership is tied to social mobility and personal success. This has been brought into sharp focus by the current buoyant market, where billionaires are made in months, simply by flipping properties. Some say it makes a mockery of hard work but there it is.

Land in Singapore is also scarce resource and, therefore, a prime target for speculation and investment both by Singaporeans and foreigners. The RPA has, therefore, served an important role in imposing restrictions against foreigners and permanent residents from owning land and other property in Singapore. They will have to demonstrate that they have or will contribute substantially to our country before they can enjoy some of the privileges Singaporeans have. I say "some" because even if they receive approval to buy a restricted property, that approval comes with conditions on selling or against renting.

This Bill seeks to enhance those restrictions and ensure that any privileges

given are less likely to be abused. In that regard, I support it. I do have a few points of clarification for the Minister which I shall come to later.

I would first like to start by asking whether we are doing enough to protect ourselves from foreigners who seek to profit at our expense. The RPA protects essentially landed properties, while the HDB Act protects public flats. Everything in between is fair game. But we should be equally concerned with that segment of the market as that will define social mobility for a good proportion of the middle class.

I am not advocating the same protection for this segment. We should not interfere too much in the private market. But there is merit in discouraging speculation in this segment of the property market by foreigners. As I have said previously in this House, I have no issues with genuine investors or home owners. They are important to the growth of the market. It is the "flippers" that concern me.

I understand that the majority of private property purchasers are by Singaporeans and PRs, and "flippers" may represent a small class. But that is not the point. Property prices can be driven by sentiment and the activities of a few at the fringes can have an impact. Even if foreigners do not significantly affect prices, how do we benefit from foreigners who flip properties for their own gain?

I, therefore, ask the Government to consider imposing some form of a tax, like the capital gains tax, on foreigners who sell their properties within a short time after purchase. We also need to address option flipping. Buying and selling options is a pure speculative activity. It adds absolutely no value, other than to artificially drive up prices. I, therefore, suggest that we make options purchased

by foreigners non-transferable, or impose a tax on profits gained on the sale of options.

As I have indicated, the measures should not be targeted at genuine investors or home owners; so those who buy with those intentions should not have any concern. But there should be no sympathy for foreigners who protest that they cannot make a quick profit.

On the Bill, I support the enactment of the new section 3(a), which obliges those who have lost or given up their citizenship or permanent residency to dispose of their restricted property in Singapore. There is no reason why they should not be treated like any other foreign person and it is good that this loop hole is closed.

I have, however, two issues for the Minister to clarify. First, where an owner of restricted property passes away, bequeathing it to a non-citizen, the Bill requires the legal personal representative to dispose of the property within five years from the death of the deceased person. This is shortened from the current 10 years. Nonetheless, I believe five years is still a tad too generous. He should sell expeditiously. Our probate procedures have been greatly simplified. There is also no longer any estate duty to pay. If he requires more time on account of any complications here or in any foreign probate proceedings, he can apply to the Controller giving good reasons.

Second, the Bill introduces a new section 4(a), which allows the Court to make a confiscation order where a defendant is convicted of an offence under section 4(6). Now, section 4(6) offence is one where a foreign person has improperly acquired an interest in a development and fails to comply with a Controller’s notice to sell it off. However, a notice to sell can only be issued after the person is convicted under section

4(3). That deals with the offence of improperly acquiring the interest in the first place.

In the circumstances, the confiscation order will not apply to a person who has improperly acquired an interest, but complies with a notice to sell. I would like to ask the Minister whether such a person would be entitled to keep any profit he makes, or any other benefit he receives, although he has violated the RPA. If so, what is the rationale for this and should the confiscation provisions not apply generally to give the Courts the power to seize any benefits enjoyed on account of any breach of the RPA? The offender could benefit significantly as there may be a lengthy period between the time he improperly acquires the interest and when the notice to sell lapses.

4.59 pm

Home ownership is a highly desired aspiration for a large proportion of Singaporeans. The discourse on property prices in the past year is testimony to this. I see this Bill as the latest response of the Government to address the concerns on rising property prices in land-scarce Singapore. The amendments detailed impose stricter rules for foreign owners of restricted residential property.

These changes will further differentiate citizens from non-citizens with regard to rights of ownership of restricted residential property.

Together with the series of measures announced by the Government over the past year (which include HDB ownership and balloting of places for primary school registration), we see the privileges of being a Singapore citizen enhanced.

Mr Deputy Speaker, on this Bill specifically, I have two queries. First, can

the Minister comment on the expected effects of this Bill on the property market? To help us better understand the potential implications of this Bill on property prices, may I ask the Minister for some details of ownership patterns: What is the proportion of restricted residential property that is owned by foreigners? What proportion of these is owner-occupied? And what is the average length of ownership – that is, are foreign owners likely to hold on to purchases for an extended period of time as long-term investments or are they are more likely to be flippers?

Second, if one intent of this Bill is to stabilise property prices, will the Minister consider extending regulation of foreign ownership to other private properties like condominiums and high-rise private apartments?

The primary aim of residential property should be to promote home ownership. We believe that an increase in homeownership among citizens will contribute to the growth of engaged stakeholders.

While HDB has been very successful in growing the proportion of homeowners among Singaporeans, we also note that as our society matures, more Singaporeans aspire to own private properties.

Given that private properties – both landed and high-rise – are valued commodities in land-scarce Singapore, will the Minister consider restricting foreign ownership of condominiums and high-rise apartments, especially those purchased purely for investment and not residential needs? This may place the coveted ownership of private property within the reach of many more Singaporeans.

Sir, I thank the Members for their support of the Bill and for speaking up. The points range from

persuading Singaporeans not to give up their citizenship to flippers of condominiums to whether the aims of this Bill are to prevent the overheating of the market and to what we can do about condominiums and foreign ownership. The Act deals with restricted properties which by definition are landed properties. The aims of the Bill are very narrow and most of these topics are neither within the purview of my Ministry nor within this Bill, but I will try and deal with some of them.

Mdm Ho Geok Choo asked if the Government would be prepared to engage Singaporeans on the brink of giving up their citizenship to persuade them not to do so. As I said, this question raises questions which are well outside the ambit and purposes of this Bill but, I think, as the Home Affairs Minister, I can say this to her that when a Singaporean seeks to renounce his or her citizenship either at ICA or at our overseas missions, the Government will engage the citizen and try and find out that person's reason for wanting to do so. We also take the opportunity to advise the citizen to take some time to reconsider their decision. But, at the end of the day, we have to recognise that a person's decision to renounce his or her citizenship is usually not taken lightly and the Government will respect that decision however much we would like the person to remain our citizen.

Coming back to the Bill, what we are doing is to establish clear principles on when the right to hold a restricted property ceases amongst others for individuals who lose or give up their Singapore citizenship. The amendments were not designed as measures to discourage Singaporeans from giving up their citizenship.

The Member has also asked if we can exercise flexibility in applying the compulsory disposal rule for foreign

beneficiaries of inherited properties and for ex-Singapore citizens. If the MP is asking whether we can selectively waive the disposal requirement for these two groups of foreigners, the short answer is no. There is no reason for us to treat them specially and differently from other foreigners. If, however, they meet the criteria to be granted approval to own restricted properties in their own right, they will be allowed to keep the properties.

Mr Hri Kumar commented that the five-year timeframe for foreign beneficiaries to dispose of their interests in restricted property is too generous. Our view is that a reduction from 10 years to five years is reasonable given that Court procedures may be involved. Having said that, we will monitor the situation to see if further adjustments to the timeframe are needed.

Mdm Ho has asked if the extension charge framework will be extended to local property developers. The restricted property extension framework is only imposed on foreign developers who are granted approval to acquire private land to develop residential units for sale. This framework is aligned with the extension premium scheme already in place under the Government Land Sales (GLS) programme. The GLS extension premium scheme is imposed on all developers, both local and foreign who develop State land.

Mr Hri Kumar has asked if we should not give the Courts the power to seize the benefits enjoyed by a foreign person who has, without approval, acquired all the units in the development, thereby acquiring an interest in the restricted property. It may be difficult for the Courts to quantify the benefits that a foreign person has enjoyed when he does this. Hence, this has not been provided for in the Bill but we will certainly consider the Member's suggestion as we go forward to see whether it can be refined further.

When the foreign person subsequently fails to comply with the notice to divest, we have empowered the courts to seize the units which the Controller has specified to be divested.

Assoc. Prof. Straughan has asked about the impact of the Bill on the property market and I think Mdm Ho complimented us on trying to make sure that the property market does not get overheated. I do not think I will accept that particular compliment. As I said, this Bill does not have such grand aims. We have to understand the Bill does not change the conditions under which foreigners can buy restricted properties. It simply enhances the penalty provisions of the Restricted Property Act (RPA) so that the penalties remain enough of a deterrent against potential abusers of the RPA.

Second, restricted properties comprising mainly landed residential properties form only 6% of the total housing stock in Singapore and only 3.6% of that 6% of the restricted properties are owned by foreigners. We have been very strict. So, only 6% of the properties can be termed landed residential properties. And if you take that figure of 6%, foreign ownership does not exceed 3.6%; so it is very small. As such, it would be surprising if the amendments to the RPA should have a significant impact on the property market.

Assoc. Prof. Straughan also has asked about the length of ownership of restricted properties. Under the RPA, foreigners who are given approval to purchase restricted properties can buy only one restricted property and this must be for owner-occupation. Further, they are not allowed to sell the property within the first three years to deter purchase for speculative purposes. After the three years, the approved purchasers can continue to hold on to their property for

as long as they need it for their ownership and occupation.

Mr Hri Kumar is suggesting that the Government consider measures such as capital gains tax and a tax on sale of options to curb speculative activity by foreigners in non-landed private properties. Assoc. Prof. Straughan has raised a related suggestion that is similar to the RPA, ie, we restrict foreign ownership of non-landed private property such as condominiums and other high-rise apartments in order to stabilise property prices. I have said the aim of the RPA is to ensure ownership of landed properties by foreigners is carefully controlled.

Issues relating to private property prices, speculation and properties are well outside the purview of this Bill. They are really best addressed to the Ministry of National Development (MND) and the Ministry of Finance (MOF). Likewise, controlling the purchase of non-landed properties by foreigners is also outside the purview of this Bill. Members may, however, know that several Ministers had previously pointed out that it is quite a bad idea to try and restrict foreigners from owning non-landed properties in Singapore. There are many possible consequences and most of them are bad for Singapore. If demand drops signficantly, all existing homeowners, many of them Singaporeans, will suffer serious asset devaluation. And our position as an international, vibrant, attractive city as a magnet for capital and talent will also suffer. That will have negative consequences for the economy. We should be mindful, therefore, that if you make a move like preventing foreign ownership of condominiums, we will have to deal with such trade-offs. Are we prepared for those trade-offs? Indeed, any debate on this topic must also take into account what will happen if such controls are imposed.

Mr Speaker, Sir, coming back to restricted properties, the Government has

been very careful about non-Singaporeans owning landed properties in Singapore and the conditions under which they can own such properties. That is why the figure today of foreign ownership of landed properties in Singapore is less than 4%. Let me reassure Members that we will continue to keep that approach.

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 Shanmugam].

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

Order for Second Reading read.