Hansard, Monday, 11 May 2015

1 Ms Irene Ng Phek Hoong asked the Minister for Foreign Affairs if he will provide an update on the assistance that Singapore has rendered to Nepal following the earthquake on 25 April 2015.

2 Mr Ang Wei Neng asked the Minister for Foreign Affairs what is the assistance which Singapore has rendered to Nepal to help Nepal recover from the recent earthquake that took place on 25 April 2015.

(for the Minister for Foreign Affairs): Mdm Speaker, may I take Question Nos 1 and 2 together, please?

Yes, please.

Thank you. Mdm Speaker, within hours of receiving the shocking and sad news, the Singapore Government mobilised a disaster relief team for deployment to Nepal in aid of relief efforts. The Home Team mounted its largest-ever deployment for an overseas disaster relief operation. The Singapore Civil Defence Force (SCDF) formed "Operation Lionheart (Nepal, Earthquake)" – the 14th such Lionheart mission – comprising a 60-member search-and-rescue team. In addition, a 66-member- strong Singapore Police Force (SPF) contingent, including Gurkha Contingent officers, was also deployed to Nepal.

Over the course of the deployment, the SCDF and SPF contingents operated in several areas in Nepal, such as the Lalitpur district around Kathmandu, Pokhara and Gorkha. The SCDF and SPF contingents worked with the Nepalese authorities and other foreign teams to provide humanitarian assistance, including search-and-rescue, relief aid and medical assistance, to the affected people, with the GC officers helping to facilitate relief operations as they were familiar with the language, terrain and local communities. The Ministry of Foreign Affairs (MFA) also despatched a four-person Crisis Response Team to Kathmandu to provide consular assistance to Singaporeans stranded in Nepal. Our Embassy in New Delhi also sent an officer to support the team subsequently.

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At the same time, the Singapore Armed Forces (SAF) immediately mobilised a joint medical team of 22 personnel and an advance team of six personnel from the Changi Regional Humanitarian Assistance and Disaster Relief Coordination Centre or RHCC. C-130 aircraft were also deployed to airlift the personnel, equipment and relief supplies into Kathmandu.

A further six personnel from the Changi RHCC were deployed, together with additional medical supplies. Eight members of the Royal Brunei Armed Forces and seven members from the Ministry of Health (MOH) were also deployed together with the SAF's medical team. The combined medical team has, to date, treated more than 3,000 patients. The RHCC assisted the Nepalese national disaster management authorities and military with their efforts to coordinate the relief efforts. Eleven sorties have been flown in and out of Kathmandu by the Republic of Singapore Air Force (RSAF), transporting more than 100 tonnes of equipment and relief supplies, various Singapore contingents, as well as evacuating Singaporeans from Nepal.

Mdm Speaker, the officers involved in this disaster relief effort have worked tirelessly, often times under trying conditions. I would like to express my appreciation to all of them for their dedication and hard work, and to their family members for their support.

In addition to mobilising our assets, the Singapore Government contributed a total of S$250,000 through the Singapore Red Cross (SRC). An initial S$100,000 was given as seed money to help kick-start the SRC donation drive. However, as news of the severity and scale of the disaster became clearer and there were increasing calls for international aid, we increased our contribution by another S$150,000 to support the SRC's efforts to purchase emergency supplies. To date, SRC has raised more than S$4.5 million, sent 14 personnel, including two medical teams with a total of 11 personnel and S$200,000 worth of emergency supplies and relief items, including food, household kits and shelter tool kits, to Nepal.

This financial contribution complements the on-going efforts by Singaporeans and non-government organisations (NGOs) to raise funds for the relief efforts in Nepal. Many Singaporeans have been moved by the tragedy. They have dug deep into their pockets and contributed generously. Other NGOs, including Mercy Relief and religious organisations have also raised more than S$800,000 to date, with many of them mounting medical and humanitarian missions to Nepal. The government of Nepal has expressed appreciation for Singapore's assistance and support to Nepal and the Nepalese people.

Mdm Speaker, I would like to assure the House that in the midst of these relief efforts, the Government also spared no effort in looking after the welfare of Singaporeans affected

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by the disaster in Nepal.

MFA's Crisis Response Team arrived in Kathmandu within a day to assist Singaporeans wishing to return home. The Ministry of Defence (MINDEF) facilitated the return of 71 Singaporeans, along with 24 other nationals, on the returning C-130 aircraft. Throughout the crisis, MFA continued to reach out to Singaporeans in Nepal to render assistance and, within five days of the earthquake, had accounted for the safety of all Singaporeans who e-registered with MFA.

Mdm Speaker, one takeaway for me from this crisis is: help us to help yourselves. I would, therefore, like to take this opportunity to encourage Singaporeans travelling overseas to e-register so that we can contact you or your next-of-kin promptly in the event of a crisis.

As for Mr Ang's question of what assistance Singapore has rendered to help Nepal recover, at present, international efforts are still focused on disaster relief and humanitarian aid. We will continue to do what is within our means to assist and support Nepal during this difficult time.

Mdm Speaker, in conclusion, I would also like to express our deepest condolences to the government and people of Nepal during this difficult period, and to extend comfort to the families of our Gurkha Contingent in Singapore.

Ms Irene Ng.

Thank you, Madam. It is heartening to see how readily Singapore responded to the disaster in Nepal. I would like to ask the Second Minister: now that the disaster relief phase is coming to an end, how would Singapore contribute to the long-term reconstruction phase that follows? Nepal is one of the poorest and least developed countries in the world and needs international support to carry on its work to reconstruct the whole country. Singapore has expertise in various areas, especially in masterplanning and housing. Can I ask the Second Minister if Singapore would be contributing to the reconstruction efforts in Nepal?

It is clear that the disaster in Nepal has taken a very big toll on the Nepalese as well as on the country. At this point in time, as I mentioned, an assessment has not been made. The Nepalese are still asking for help in humanitarian aid and the outpouring has not been coordinated. Until such time, we do not want to pre-empt the kind of aid that is needed.

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In the same way, too, when the relief and rescue work was done, not everything that went into the place were things that the Nepalese needed. So, when the international community comes together to help them with reconstruction, Singapore will do our part to contribute expertise in a way that we can and not overextend ourselves so that we do not over-reach what we can do as a nation.

But we should also not discount the public in Singapore and NGOs, such as Mercy Relief as well as SRC, to extend their help also, in the development and rebuilding of Nepal.

Mr Ang Wei Neng.

Mdm Speaker, I thank the Second Minister for the comprehensive reply. Firstly, I want to offer my condolences to the Nepal citizens who have lost their loved ones in this earthquake and also congratulate and thank our Singapore team members – SPF officers, SCDF officers, and SAF officers – for doing a great job in Nepal. I also feel for the Singaporeans who were affected by the earthquake in Nepal.

I understand the Second Minister had answered that we would look at what kind of effort we could provide Nepal in due time. However, I would specifically like to ask the Second Minister whether the Government would consider assisting Nepal to rebuild parts of the destroyed areas, similar to what we have done for Aceh.

Secondly, I would like to ask the Second Minister how MFA kept in touch with the Singapore Mount Everest Climbing team after the 25 April earthquake. What advice did MFA give to the team when the team initially decided to carry on with their climb despite extensive damages in Kathmandu and the risk of avalanches in the mountain areas? I understand the team only decided to end its mission on 29 April, four days after the earthquake.

I thank the Member for the question. As I mentioned, it is too early to pre-empt the kind of aid that we should be giving to Nepal or whether to scale it to the kind of aid that we gave to Aceh. Clearly, even in Aceh, all our NGOs played a very big part, because they were our good neighbours, they had connections and, sometimes, NGOs can do a better job than governments.

In terms of the expedition by Singaporeans who went there, they were in very close touch with the authorities, as well as the base communications. At times, they also communicated personally with me. We always assured them that if they needed to get help, if they had the wherewithal to do it, they will be supported. You must remember that the Everest base camp was also part of the disaster area. Many people, climbers, also died there.

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It was a very difficult terrain. Despite that, arrangements were made, they came out, went back to Kathmandu and they are now back in Singapore. So, we are really thankful for the efforts they have made to fly the Singapore flag, to get up to the peak of Everest, to celebrate SG50. Unfortunately, they did not achieve it but, in the process, they knew what was more important – to keep safe, to make sure that they can come back safely and without harm to themselves, and, hopefully, one day, they can pursue their dreams.

3 Mr Christopher de Souza asked the Minister for Culture, Community and Youth (a) whether he can provide an update on the progress of preparations for the 28th Southeast Asian (SEA) Games to be held in June 2015; (b) what is the number of sports that will be featured; and (c) whether the Ministry will consider having a special exhibition accessible to SEA Games participants and the public that showcases Singapore's relations with its ASEAN neighbours over the past 50 years.

Mdm Speaker, we started planning for the Games three years ago. Preparations for the event are currently in full swing and progressing well. Over the past few weeks, we have carried out several events at the various competition venues to test-run our systems and processes.

Based on the experience of past Southeast Asian (SEA) Games, the focus during the Games tends to be on the athletes and the competitions. For this reason, we do not think it will be so useful to have a dedicated exhibition on Singapore's relation with our ASEAN neighbours. Instead, we will find different ways to highlight this throughout the Games. For example, it can be done in the Opening Ceremony or through social media platforms where we can promote ASEAN and our relations in ASEAN.

The SEA Games in Singapore will feature 36 sports and around 400 events, as well as about 10,000 athletes and officials. We are also planning to field Team Singapore's largest-ever contingent, with 748 athletes representing Singapore in the Games. Our athletes are training intensively. I have spoken to many of them. They have told me that they are determined to do their best and to do Singapore proud. In their preparatory and qualifying competitions in the run-up to the Games, many athletes have posted outstanding performances, achieved new personal bests and broken long-standing national records. What remains is for Singaporeans to come forward to attend the Games with family and friends to cheer for our Team Singapore athletes. While being gracious hosts to our Southeast Asian friends, let us also make the home-ground advantage for Team Singapore count by being there to cheer our athletes on.

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At the end of the day, it is the support and encouragement of all Singaporeans that will determine whether we have an extraordinary Games, one that is worthy of our Golden Jubilee.

Er Dr Lee Bee Wah.

Mdm Speaker, I would like to ask the Minister what is the status of ticket sales.

Mdm Speaker, the ticket sales are progressing well. It is somewhat uneven. There are some events which are very popular; I think if you are planning to buy a ticket for the Opening Ceremony, I am sorry to say that tickets have probably been sold out. And if you are going for very popular games like the water polo finals, that event is also sold out; swimming events, very popular. Certain events have been very popular. Some are still progressing slowly, steadily, partly because the fixtures have just been announced. For example, football fixtures were just announced; and some other sports, the fixtures had just been announced. So, it may take a bit more time.

But I would say that, based on past experience, compared to other games and sporting events, the ticket sales so far have been better than expected, compared to previous events. We will continue to encourage all Singaporeans to, like I said earlier, take this once-in-a-lifetime opportunity to support Team Singapore on home ground in a new competition venue like the Sports Hub.

It is true that we will host the SEA Games again 20-something years later because all the Southeast Asian countries will take turns every two years. But we will never have another SEA Games hosted in our Golden Jubilee Year like this. So, this is a historic opportunity and I would encourage all Singaporeans to come and support Team Singapore.

Mr David Ong.

Madam, some quick supplementary questions for the Minister.

The Sports Hub is touted to be the centrepiece of the SEA Games, so, I would like to ask about the status of the hybrid Desso pitch that was much talked about and whether it could stand the robust tests during the SEA Games. What are some of the marquee fringe activities and events that Singaporeans and participants can look out for? Of course, some of the events are already way over-sold. So, are there any plans to expand the capacity or even look at alternative sites so that it can accommodate more Singaporeans and participants to cheer

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Team Singapore on?

Madam, on the pitch of the Sports Hub at the National Stadium, as I have explained before, the SHPR, the Sports Hub consortium, has already put in place a lay-and-play solution, meaning to say, they are growing the grass somewhere else and they will be laying it on later when the pitch is needed. So, if you were to go to the National Stadium now, the entire pitch has been covered for the rehearsals and the Opening Ceremony. Naturally, when you open the covering, all the grass there would have died. It is only natural, because it is covered for days or weeks. But because we have a lay-and-play solution, the grass is being grown elsewhere. And I have seen the grass grown elsewhere. It is fine, it is luscious. The grass is good. So, the next step is when the grass is needed, it will be transferred over as part of this lay-and-play solution. The company that has been contracted will be in charge of doing that.

The hon Member also asked about marquee fringe events. Indeed, that is what we are planning to do, because many people come for these events not just for the games and the sports but also as part of a lifestyle experience. So, we will be having carnivals at the Sports Hub and also at Marina Bay. At Marina Bay, we are hosting all our sailing and dragon boating events. There will be a big carnival there. And in the Sports Hub where many events are going to be held, we are also going to have a sports carnival around the Sports Hub. So, hopefully, that will draw more people to come for these carnivals and then to support and watch our Team Singapore athletes in action.

On the over-subscribed events, whether or not we can find ways to broaden their viewing, I would say that we are doing it through various means. One, the events will be telecast live on TV. So, we can put up community screening sites for people to watch. We are also making it available on social media platforms, so you can download an app which will be announced very shortly and you can even watch the events live on your mobile platforms, whether it is a handphone or a mobile device. These will allow also for viewing of all the different sports.

4 Mr Thomas Chua Kee Seng asked the Minister for Manpower how can companies that are outside of the 17 priority sectors in the SkillsFuture Earn and Learn Programme participate in the programme.

5 Mr Thomas Chua Kee Seng asked the Minister for Manpower whether trade associations from the non-priority sectors can be supported with more resources and funding to develop their industry manpower plan under the SkillsFuture Earn and Learn

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Programme.

Madam, may I have your permission to take Question Nos 4 and 5 together, please?

Yes, please.

Mdm Speaker, the SkillsFuture Earn and Learn Programme (ELP), launched in March this year, is a work-study programme designed to give fresh graduates from the polytechnics and the Institute of Technical Education (ITE) a head start in careers related to their study. It provides them with more opportunities after graduation to build on the skills and knowledge acquired in school and to better support their transition to the workforce.

The Food Manufacturing industry was the first sector to roll out the ELP in April this year. Other industries that will come on board in 2015 include Food Services, Games Development, Logistics, Infocomm Technology, Marine and Offshore Engineering, Retail and Precision Engineering. We will progressively implement the ELP in more industries and, eventually, cover up to one in three polytechnic and ITE graduates.

We have prioritised these industries to start first because they are more ready. At the same time, we also encourage the participation of trade associations and chambers (TACs) to help reach out to companies in their sectors, whether priority or non-priority-sectors. Mr Thomas Chua may be pleased to know that the Government will support them with additional resources and work with them to design quality ELPs that are not only relevant to the individual companies but also to the industry as a whole. Together, we can move faster in developing skills progression frameworks and career progression pathways for our fresh graduates.

6 Er Dr Lee Bee Wah asked the Prime Minister (a) whether the Ministry is aware of how many Singaporeans are invested as individual owners of properties in Iskandar Malaysia; and (b) how are our banks safeguarded against any major default in property loans to these buyers.

(for the Prime Minister): Mdm Speaker, I am taking this question on behalf of Deputy Prime Minister Tharman

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Shanmugaratnam and the Chairman of the Monetary Authority of Singapore (MAS).

Madam, there are many risks involved in overseas property purchases, especially in markets where there is uncertainty of supply or no effective regulation of supply. If there is an over-supply of properties, investments can lose their value, and it will also be difficult to find tenants for an investment property.

In Iskandar and Johor, some reports have highlighted aggressive land-banking by developers. There is, indeed, a real concern about future over-supply in the property market there and, hence, the potential decline in value of homes. Based on data from Malaysia's National Property Information Centre, there are around 336,000 new private residential units in the pipeline. This is more than the total number of private homes in Singapore. So, everything that is coming through the pipeline, incoming and being planned, is already more than the total number of private homes in Singapore. The data do not include another 1,400 hectares of reclaimed land near the Tuas Second Link that will come on stream from 2020 onwards.

Given these indications, there are many reports that indicate that buyers are becoming more cautious. Official Malaysian data suggest that the Johor housing market is already slowing down, with the value of residential property transactions falling by 42% on a quarter-on-quarter basis in the fourth quarter of 2014. Singaporean buyers, too, are becoming wary. According to surveys of real estate agencies in Singapore, the number of Malaysian properties bought through these agencies dropped from 2,609 in 2013 to 838 in 2014.

Nevertheless, not all Singaporeans have recognised the risks involved in overseas property purchases. Hence, MAS and the Council of Estate Agents (CEA) will continue to step up efforts in raising awareness and highlighting these risks. For example, the CEA has issued guidelines on what investors in overseas properties should look out for. These include finding out about rules or restrictions on foreign property purchases and ownership, the taxes payable, and the dispute resolution avenues available in the foreign market. These are besides the risk of oversupply that I mentioned earlier, resulting in potential investment losses.

At the systemic level, financial institutions in Singapore do not have large exposures to loans for the purchase of overseas properties. In fact, the banks themselves are cautious about financing the purchase of overseas properties. Hence, such loans make up only 2% of the housing loan portfolios of the key mortgage lenders in Singapore. In addition, the Total Debt Servicing Ratio (TDSR) framework introduced by MAS in June 2013 requires lenders to assess the debt servicing ability of their customers for all new property loans, regardless of whether the property is in Singapore or overseas. All existing debt obligations, including

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those for overseas property purchases, must be included for such assessments.

MAS' stress tests on banks' housing loan portfolios indicate that the banks will remain sound even under stressed conditions.

Er Dr Lee Bee Wah.

Thank you, Mdm Speaker, and I thank the Minister for the answer. According to the feedback from my friends and residents, a lot of Singaporeans have gone overseas to buy properties because of the Additional Buyer's Stamp Duty imposed in Singapore, coupled with aggressive advertisements by foreign developers, including those from Iskandar Malaysia. I would like to ask the Minister: is there any possibility or review on lifting the Additional Buyer's Stamp Duty for Singaporeans?

Madam, we should look at this separately because we have a set of cooling measures which is put in place taking into account global conditions and our domestic property market. And we know why there is a need for that. It is really because, globally, interest rates are low, returns are low, there is a lot of liquidity in the market and investors everywhere, including in Singapore, are looking for things to invest in. If we are not careful, then you can easily have a bubble being built up, which is why we had to put in place cooling measures in our property market. In that context, whatever we do on the cooling measures has to take into consideration the broader global developments as well as our domestic property market trends and ensure that we continue to have a stable and sustainable property market within Singapore.

On the advertising standards which the hon Member talked about, that is something which we can and should look into. In fact, I understand that the Advertising Standards Authority of Singapore is already looking into reviewing their guidelines for advertising on investment in properties and the guidelines would apply to investments in property both locally as well as overseas. They are reviewing the guidelines and I think they will put in place a set of more stringent guidelines in future. What is important at the end of the day is that individuals must have the responsibility when they make these decisions, and we have to continue to raise the awareness of potential investors and educate them to make sure that they do sufficient due diligence before they make any property purchases, overseas in particular.

There are many risks. I have mentioned oversupply risks as one of the considerations. There are also foreign exchange risks which can move easily against the investors' favour. There are risks of changes to tax and regulatory frameworks governing property ownership. For example, there may be rules that restrict the non-residents' ability to sell a property in

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that country easily. And these are risks that can happen in any investment in overseas properties. These are risks that we must continually emphasise. The CEA and MAS, as I mentioned earlier, will step up their efforts to help investors understand these risks better and to do their due diligence.

7 Mr Yee Jenn Jong asked the Minister for Trade and Industry (a) when electric vehicles (EVs) will be made available to the public under the Electric Vehicle Phase 2 car-sharing programme; (b) what is the rationale for Phase 2 to have a much longer duration of up to 10 years compared to Phase 1; (c) whether ownership of EVs, other than the car-sharing programme, will be encouraged under Phase 2; and (d) if so, whether the Ministry will work with the Ministry of Transport to look at varying the vehicle's Additional Registration Fee (ARF) and giving COE rebates to make the cost of EVs comparable to that of non-electric vehicles.

(for the Minister for Trade and Industry): Mdm Speaker, the Land Transport Authority (LTA) and Economic Development Board (EDB) had issued a Request for Information (RFI) in December 2014 to invite proposals for the trial of an electric vehicle (EV) car-sharing programme in Singapore under Phase 2 of the EV test bed. The submission period has ended, and the proposals are currently being evaluated by LTA and EDB. The results of the RFI will be announced by the end of 2015.

EV Phase 2 will explore fleet-based, shared car operations with the potential to reap economies of scale through higher daily mileage and potentially lower running costs. Operators under Phase 2 will have to incur significant upfront cost of investments in EVs and a network of charging infrastructure. The 10-year period will allow adequate time for the companies to recover their investment.

Our broader transport goal is to encourage the use of public transport and reduce reliance on private vehicle ownership, whether they are EVs or not. Those who wish to purchase EVs can benefit from the recently enhanced Carbon Emissions-based Vehicle Scheme (CEVS), under which low-carbon emission vehicles stand to enjoy significant rebates of up to $30,000 off the Additional Registration Fee (ARF).

Mr Yee Jenn Jong.

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I thank the Minister of State for the answers. I have three supplementary questions.

The first is on the duration of 10 years for Phase 2. Ten years seem to be quite a long time. I understand that yes, there is a need for the investment to be recouped. But given that many cities have already moved on to large-scale commercial implementation, it means that these countries will gain the advantage of wide-scale EV implementations over us. Will we lose out in terms of building capabilities among our companies and also in our country's leadership in sustainable and liveable cities, if we wait 10 years before even implementing this on a larger commercial scale basis? And are EVs something that is important for us to invest in our economic development?

The second question is on EV ownership. I would like to ask whether EV ownership can be factored into Phase 2's 10-year period when there has been sufficient infrastructure that has been built. Given the high cost of adoption, will there be incentives, such as Certificate of Entitlement (COE) and tax rebates, to encourage adoption so that we can have an even larger scale of implementation?

Lastly, I would like to ask regarding other types of EV. Will buses and taxis also be factored into Phase 2, since they are also heavily used and have a shared fleet that can be maintained by an operator with rapid charging facilities? So, this will also give us that larger- scale implementation that we need.

I thank the Member for the questions. On an overall basis, it is still under the study phase. We have just completed Phase 1, going to Phase 2. From testing the vehicle out on the roads in Phase 1, to rolling out the fleet base in Phase 2, we are still undertaking research and study. Technology changes all the time. So, the duration of 10 years is a safer duration for operators when they make decisions on investments. Also, over the 10-year period, technological advancements will change. We can see that there are many different types of technology that are advanced today, with batteries that are rechargeable, last longer and take a shorter time to charge.

EV ownership right now is still in the study phase but the policy intent has always been not to have individual car ownership and, as best as possible, to use public transport. Nevertheless, we want to give more options to consumers. We have to wait till the Phase 2 study is over because individual ownership is beyond the Phase 2 study right now. So, let us allow Phase 2 to progress and the operator to make the necessary infrastructure investments with the fleet base operation to see the results.

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As far as rebates are concerned, I would refer that to the Ministry of Transport (MOT) to study what is available and whether it is necessary to come up with other types of rebates, including COE rebates. Currently, MOT is having a review, but I am not too sure if the outcome will be in the near term. So, we will let Phase 2 be implemented before considering any other measures.

8 Prof Tan Tai Yong asked the Prime Minister (a) to date, how many honorary scholarships (scholarships with no funding) has the Public Service Commission given out; (b) when was the last occurrence and what was this scholarship given out for; and (c) what are the reasons for this class of scholarships and whether these reasons can apply to a wider range of students.

(for the Prime Minister): The Public Service Commission (PSC) does not currently award honorary, or otherwise called nominal scholarships, with no funding for the students. Between 1968 and 1992, PSC awarded nominal scholarships to 10 President's Scholarship recipients. These scholarships, at that time, did not come with funding and had no bond. They recognised individuals who wanted to pursue courses overseas which PSC had decided not to fund.

Currently, PSC scholarships are awarded to outstanding men and women with the passion, capability and clear commitment to serve Singapore and Singaporeans through a career in the Public Service. Hence, today, all individuals awarded PSC scholarships are provided full funding for their university studies and are expected to commit to work in the Public Service. Under this framework, PSC thus no longer awards nominal scholarships.

Prof Tan Tai Yong.

I thank the Deputy Prime Minister for his answer. I am just wondering, as more students come from families which may not need financial support of the sort that scholarships give, but yet would want the recognition that scholarships acknowledge, does the Deputy Prime Minister see the possibility of more honorary scholarships being awarded as a way of acknowledging academic excellence but not taxing on the resources that the scholarships would entail by giving financial support?

Mdm Speaker, I described the purpose of PSC scholarships. The purpose of PSC scholarships is not merely to recognise the academic attainments of a particular individual. They are designed to have outstanding men and women with a passion,

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capability and clear commitment to serve Singapore and Singaporeans in the Public Service.

Hence, if there are such Singaporeans of ability who want to apply for a PSC scholarship, we would be happy to award it to the student. But if they are equivalently bright, young and able people who have decided that, "No, this is not what I want to do", then, this does not come under the ambit of the PSC scholarship and it would not be appropriate to do so.

9 Mr Baey Yam Keng asked the Minister for Communications and Information in light of SMRT's announcement that it will work with OMGTel to bid for Singapore's fourth wireless telecommunications carrier licence, how does the Ministry ensure that high telecommunication service standards are maintained if the partners of the licence do not have proven track records.

Mdm Speaker, the Infocomm Development Authority (IDA) issued a public consultation in April last year seeking views from the industry on potential interest to enter Singapore's mobile market. A new entrant would further spur competition in the mobile market, benefiting consumers through more attractive pricing and innovative services.

Should a new mobile operator be interested to enter the Singapore market, they will need to take part in a spectrum auction. IDA has yet to determine the rules for the next spectrum auction. Nonetheless, in previous auctions, IDA has stipulated qualifying criteria, which include the requirement for applicants to have strong technical capabilities and financial positions. This is to ensure that only serious and capable players participate in the spectrum auction. Any new mobile operator will also have to comply with IDA's regulatory obligations, including its Quality of Service frameworks.

Mr Baey Yam Keng.

I thank the Minister for the answer. I would like to ask: going back to the time when the Singapore telecoms industry was liberalised, the partners in M1 and StarHub did not necessarily have technical backgrounds in the telecoms sector. So, does the same rule apply then and now, in this new licence? I would appreciate it if the Minister could shed more light on this.

Madam, we have to see how the market has evolved and the experience that we have gained. For example, when we invited new entrants for the

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2013 4G spectrum auction, we had a prequalification phase where we ask the participants to declare their capital structure, financial proposal, technical capabilities and the proposed 4G systems and services, amongst others. Through these criteria, we prequalified them and then invited those prequalified to tender for the spectrum. We are likely to put in similar criteria for the next spectrum auction.

Mr Zaqy Mohamad.

I just want to ask a couple of questions. One, for evaluation, what is the weightage we place on the tender price as well as the innovations that we can expect from such bidders? The bidding should not just be based on price considerations, I suppose, because that would also increase the price. With increased competition, what is the Ministry's long-term strategy to enhance the telecom users' experience here in Singapore?

That is exactly the intention, Mdm Speaker. We do have a variety of criteria. I am not at liberty to declare the weightage that our regulators will use to decide. But certainly, we will take into account not only pricing but also the ability to innovate.

To the Member's second point, clearly, we believe that there is space for a fourth telecoms company (telco). But we do not want just another telco. We want a telco that can bring innovation to the market and therefore, cause the existing incumbents to also innovate. We want to spur competition. Certainly, we will bear all these factors in mind to ensure that it will spur growth to benefit consumers.

Mr Cristopher de Souza.

I think there might be a Question No 10 before my question, Mdm Speaker.

My apologies. Mr Baey Yam Keng.

10 Mr Baey Yam Keng asked the Minister for Transport (a) whether SMRT's collaboration with OMGTel to bid for Singapore's fourth wireless telecommunications carrier licence will affect the public transport services provided by SMRT; and (b) whether the Government can and will impose conditions to ensure that the public interest in the

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provision of public transport services is not compromised.

Mdm Speaker, I expect SMRT Corporation to remain fully focused on providing reliable and efficient public transport services. In this regard, SMRT has given their assurances on multiple occasions. What we understand from SMRT is that it intends to take a stake with an investment of up to $34.5 million, which is small, compared to the overall cost of a new mobile network, and that the collaboration will be for the provision of services and goods that leverage on SMRT's media presence and commuter reach.

In any case, the Land Transport Authority (LTA) imposes strict Operating Performance Standards and Codes of Practice on our public transport operators to ensure that they perform to expectations. These standards and codes are reviewed regularly, with the most recent round of tightening announced earlier this year. If operators fail to comply with these regulatory requirements, they can be penalised up to $1 million per incident, or 10% of the annual fare revenue of the licensed system, whichever is higher.

LTA will continue to keep a close eye on our public transport operators to ensure that they are not distracted by their non-public transport businesses and that their primary mission of providing public transport services is not compromised.

Mr Baey Yam Keng.

Madam, I have three questions as follow-up. First, looking at the past few years of financial figures for SMRT, we note that the revenues and earnings of SMRT, fare-based vs non fare-based, have shown a greater discrepancy. There are more profits generated from non-fare businesses. So, how does the Government ensure that the management's attention is not distracted, given that other businesses are bringing the company more profitability?

The second question is regarding the fines. If we look at the fines imposed on SMRT over the last three years, they constitute about, at most, 2% of the overall profits that the company made. How is the Government able to ensure that this fine amount or the system of penalty is enough to make sure that the fines serve as an adequate deterrent and penalty for the public transport operators (PTOs)?

My third question is: in today's Zaobao interview given by the Chief Executive Oficer (CEO) of SMRT, he claimed that the profits from non-fare businesses helped to keep public transport fares low. Is this just a goodwill gesture of the company, or is it featured in the Public Transport Council (PTC)'s assessment of any fare increase proposals by the PTOs?

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Could this goodwill be mandated as a condition for such PTOs to be allowed to diversify into other businesses so that the public interest of Singaporeans and commuters is protected?

Mdm Speaker, I thank the Member for the supplementary questions. The first is on financial figures. It is, indeed, true that for the last few years, the vast majority of the profits have come from non-fare revenue. In the recent financial year, profit of the entire SMRT group is about $91 million. If I recall correctly, more than 90% of this was from non-fare businesses and the pattern was familiar in the preceding years.

Regardless of that, for LTA and the Ministry of Transport (MOT), we regulate them based on the Operating Performance Standards as well as the Codes of Practice. It is our job to make sure that they are not distracted as a result of ventures together with the Sports Hub or this possible venture with the fourth telecom operator, and to concentrate on delivering public transport to the degree of reliability and service standards that are expected of them.

On the fines, as part of the review, it was last year or the year before that we had raised the fines from the maximum of $1 million to either $1 million or 10% of the annual fare revenue of the licensed system, whichever is higher. That is not to say that for every incident, we will fine them to this amount. It really depends on a matrix of factors, including, for example, the severity of the disruption, the number of commuters that were affected and so on and so forth.

The reason this limit was raised was that when we did a review following the December 2011 incident, we felt that the $1 million limit was insufficient for an incident of that severity. Hence, we decided to make a move to increase the limit that we could impose on the PTOs should a similar incident of such nature happen again.

On the third point, I have not read the CEO's interview with Zaobao. I will certainly go and look it up. As far as we are concerned, public transport fares are governed by the fare formula that the PTC works on. It is the formula that is used to determine the extent of the fare increase, or reduction should the factors call for a reduction as we expect for this year's exercise. Having said that, PTC will, of course, look into the financial performance of the operator and one of the features is that it requires the operators, if they are doing well, to make a contribution to the Public Transport Fund. Both SBS Transit (SBST) and SMRT made a contribution last year. This year, when we had the fare increase in April, they made a larger contribution to the Public Transport Fund.

Mr Zaqy Mohamad.

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I thank the Minister for the clarification. Just a couple of supplementary questions. I am glad that the Minister mentioned about keeping SMRT focused on operating guidelines and requirements. To keep SMRT focused and to ensure that its he profits every year are not misconstrued as profiteering from passengers, what is stopping the regulator – LTA or the Ministry – from ensuring that for every new non-fare business that SMRT undertakes, it has to set up a separate subsidiary? Or even for existing non-fare business, should SMRT then move these entities or businesses to a separate subsidiary?

On the Minister's reply earlier regarding the fines review, when he said the fines are a proportion of operating revenue, is that just operating revenue from the fare business or does it include total operating revenue that includes all the non-fare business as well?

I thank the Member for his suggestion. Indeed, it is possible for them to set up a subsidiary, but I suspect they will still be looking at the overall performance of the entire corporation. Although they manage the non-fare businesses separately, we look at it in its entirety.

The Member's second question was whether it is on the revenue of the operating system itself or in totality. Actually, it is the fare revenue of the operations, which is the vast majority of total revenue. So. if you are looking at revenue, by far, the vast majority of it comes from operating trains. But in terms of profits, the bulk of the profit, probably up to 90%, actually comes from the non-fare businesses that they run.

Er Dr Lee Bee Wah.

Mdm Speaker, by asking the PTOs to just contribute to the Public Transport Fund is not sufficient. They are providing public transport and, if they would want to do any other businesses, they must bring benefit to the commuters. Therefore, any profits from other businesses, they should use them to cross-subsidise the public transport side of it. Otherwise, why should we allow them to venture into other businesses? I would like to ask the Minister: would PTC change the fare revision formula to take into consideration the overall profit, so as to cross-subsidise the commuters' fare?

Mdm Speaker, the PTC formula was deliberated in this House a couple of years ago. It runs till 2017, by which time, we would then take a relook at the formula, and I am sure Members can give their suggestions in due course for that to be taken into account.

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Mr Baey Yam Keng.

Madam, I would like to ask the Minister to clarify, because I was looking at section 19 of the Rapid Transit Systems (RTS) Act. The penalty is up to $1 million or 10% of its annual fare revenue of a rail line. Does that refer to a particular line that has suffered some breakdown or disruption or the rail revenue for all rail operations under the PTO?

For a particular licensed system. The North -South and East-West Lines are considered as one licensed system.

Ms Chia Yong Yong.

Thus far, the penalties do not seem to be working very well in terms of ensuring that there are smooth operations for the benefit of commuters. Right now, we are also having an issue with SMRT wanting to go into another area of business which is not its core business. I know the Minister has stated that the Ministry will ensure that they continue to give good services and adhere to the transport standards that are required. But in more specific terms, how would the Ministry ensure that they do not get distracted by making more profits, seeing, of course, that the computation of the penalties could possibly be quite minuscule, particularly if it is limited only to revenue of a particular line?

On the point that the penalty could be minuscule because it is only on the revenue of a particular licensed system, it probably is not so. If you look at the revenue for the North-South and East-West Lines, that constitutes the bulk of the revenue. It could be a very, very hefty fine well beyond $1 million should there be a breakdown that is so severe that LTA has to impose the 10% limit.

What are the ways in which we look at it? First, we look, in particular, at the use of manpower with regard to SMRT Trains, which is the entity that we regulate. If, for example, we see senior manpower being taken out from SMRT Trains to be used to support their venture with the fourth telecom company, we will be very concerned.

11 Mr Christopher de Souza asked the Minister for Transport (a) whether he can provide a further update on the progress of the high-speed rail project that will connect Singapore and Kuala Lumpur; and (b) what will the Ministry be doing in the next few years

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to ensure timely completion of the project.

Mdm Speaker, Prime Minister Lee announced the location of the Singapore terminus of the Kuala Lumpur (KL)-Singapore High Speed Rail last week. We are deep in discussions with the Malaysians on the technical, security, commercial and regulatory aspects, having completed our own preliminary studies into these areas. As both Prime Minister Lee and Prime Minister Najib noted, this is a challenging and complicated project and we should take the time required to plan well and implement well. Both countries are fully committed to the success of this project.

Mr Christopher de Souza.

May I ask the Minister if there is an estimate cost per ticket from Jurong East to KL and KL back on the express version of the train?

I thank the Member for his supplementary question. It is too early for us to talk about fares, but we have already shared with the Malaysians that we think it is better for the express service between KL and Singapore, and for the transit service that runs from KL through a number of stops before it reaches Singapore, for both these sets of services to be managed separately.

12 Ms Kuik Shiao-Yin asked the Minister for Social and Family Development (a) what intercultural and inter-religious programmes are in place to actively rehabilitate youth offenders who make seditious remarks against other races and religions; and (b) whether engagement and mentorship from representatives of religious or racial groups are integrated into the rehabilitative care of such youth offenders.

(for the Minister for Social and Family Development): Mdm Speaker, to uphold harmony in our multi-racial, multicultural society, we educate and inculcate the values of tolerance, respect and appreciation of different faiths and religions. This starts as early as the preschooling age and all the way to formal schooling years from primary school onwards.

Youths who make offensive remarks on race and religion may receive different intervention and penalties, depending on the severity of the offence. These could include

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conditional warnings, probation and placement in a juvenile rehabilitation centre, reformative training centre or prison. These measures encourage the youth offenders to take responsibility for their actions and equip them with the life skills to embark on constructive lifestyles. Of course, the involvement of families is also very critical in the rehabilitation of youth offenders.

Typically, rehabilitation programmes for those who make offensive remarks on race and religion may include counselling on the importance of respect for other races and religions. The youths would also have the opportunity to interact with people of different races and religions through activities, role-modelling, and also community service or be mentored by staff or volunteers.

Besides rehabilitation measures, education and sound values imparted at home, in school and in public all go towards creating a foundation of strong inter-religious harmony in Singapore.

Ms Kuik Shiao-Yin.

Just a supplementary question. Given how significant online communication is to the average youth today, are there any collaborative efforts between the Ministry of Social and Family Development (MSF) and the Ministry of Education (MOE) that specifically look at educating young people about the social, political or legal boundaries that have to do with communications about race and religion?

I thank the Member for the supplementary question. Yes, indeed, MSF and MOE work very closely. You would be aware that MOE has a cyber-wellness curriculum that aims to equip our students with lifelong socio-emotional competency, so that they can grow up to be safe, responsible and respectful users in the online space. Of course, like I have mentioned earlier, parental guidance is very, very critical. To this end, on the parental front, if there are some parents who face difficulties in addressing their children's challenging behaviour, whether online or offline, there are platforms where they can approach community agencies, for example, the Family Service Centre (FSC). We work with MOE and there are also counsellors in the school to guide the parents and students accordingly. All these are made available with a view to preventing the children's behaviour from getting worse, whether online or offline. That is on the parental front.

On the Member's question of whether there are inter-racial programmes and so on, earlier on, I mentioned about youth offenders, for example, that they can be referred to the OnePeople.sg – Explorations in Ethnicity programme. This is put together by the organisation that spearheads racial harmony initiatives in Singapore. To that end, MSF and MOE give it

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very strong support. For example, the OnePeople.sg – Explorations in Ethnicity course is a two-day course comprising between 20 and 30 participants and very experiential learning activities, so that participants can absorb better through role-playing and so on. It serves to guide our youths to better navigate some of these very sensitive topics in the online space.

13 Mr Gerald Giam Yean Song asked the Minister for Trade and Industry (a) whether the Government plans to extend the moratorium on additional casino licences once the current 10-year moratorium on the current two licences expires in 2016; and (b) whether Singaporeans will be consulted well in advance of any plans to issue additional casino licences.

Mdm Speaker, the 10-year moratorium on additional casino licences expires in 2017. During this period, our focus is to work with the two Integrated Resorts (IRs) to ensure that their attractions and services continue to meet Singapore's needs and enhance Singapore's tourism appeal.

Mr Gerald Giam.

Madam, has the Government received any requests from casino operators to issue more licences after 2017? If so, are these from existing operators or are they new ones? And what arguments have been put forward by the casinos, if any?

Second, what will the Government's considerations be in granting or not granting casino licences after 2017?

Finally, how is the Government tracking the social harm that has been brought about by casinos since they were introduced?

Mdm Speaker, currently we have no plans beyond the moratorium. As I said, the priority now is to work with the existing IRs to ensure that they continue to improve their offerings so that, as part of the tourism appeal and content of Singapore, they remain attractive.

For the last few years, it is useful to note that other countries in the region have also started to build or seen the completion of casinos. For instance, the Philippines will have five IRs by 2018 and Korea will also have five by 2019. Other countries that have expressed an

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interest to build IRs are Japan and Taiwan. This is the international competitive landscape in terms of major cities improving their tourism attractions. This will be one set of considerations for us as and when we consider the next steps.

Domestically, the two IRs contribute between 1.5% and 2% to our GDP and they have created more than 20,000 jobs. These are also the economic considerations that we have to bear in mind.

For the monitoring of crimes related to the casino operations, the Casino Regulatory Authority (CRA) is keeping a very close watch. From their reports, we have not seen a substantial increase in crimes associated with casinos.

14 Mr Hri Kumar Nair asked the Minister for Manpower whether the Ministry will consider stronger sanctions against employers who fail to pay, or wrongfully withhold, wages, whether to local or foreign employees.

The Employment Act (EA) protects both local and foreign workers against salary non-payment. Under the law, employers are required to pay their employees within seven days after the end of the salary period. Failure to do so is an offence and employers are liable, upon conviction, to a fine or imprisonment, or both.

Besides prosecution, the Ministry of Manpower (MOM) can take a range of enforcement actions, including issuing warning and imposing fines. These employers will also have their privilege to hire foreign workers suspended.

In the most recent amendments to the Employment Act (2014), we raised the penalties for failure to pay salaries. We introduced mandatory minimum fines of $3,000 for first-time offenders and $6,000 for repeat offenders. We also introduced higher maximum fines for both first-timers, from $5,000 to $15,000, and for repeat offenders, from $10,000 to $30,000. At the same time, we enhanced MOM's enforcement and investigatory powers, granting employment inspectors the power to arrest any person believed to be guilty of failing to pay salary, as well as the power to enter workplaces to conduct inspections.

MOM has stepped up its enforcement efforts since 2014. MOM now investigates every salary-related claim for employees covered under the Employment Act. We take a particularly serious view of employers who wilfully refuse to pay. Last year, MOM took action against 645 employers for salary-related offences. Forty-nine employers were prosecuted

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for severe breaches. This is four times more than the number in 2013.

We therefore, urge workers who have not been paid their salaries or feel that their wages have been wrongfully withheld to come forward early to MOM or their unions for assistance.

Mr Hri Kumar Nair.

I thank the Minister for the answer. I have two supplementary questions. Could the Minister let us know what is the number of pending cases with MOM on unpaid salaries?

Second, are there any mechanisms to help employees in salary dispute cases where there is a dispute as to whether payments are made, for example, requiring the employer to pay the monies into MOM for safeguarding funds so that, at the end of the dispute, the employee can be assured that there will be monies there for him to receive payment?

Mdm Speaker, of the 645 cases prosecuted last year, most of them were issued advisories or warning orders, and 49 employers, as I mentioned earlier, were prosecuted in Court. This is the action taken against employers. At the same time, employers were also taken to the Labour Court to settle the payment to the workers. For that, last year, we cleared about 1,630 cases. And of these cases, two-thirds of the workers were able to receive full payment on the orders of the Labour Court. However, one-third of them, due to financial difficulties faced by the companies, received either partial payment or, in some cases, no payment.

We investigated further into those employers who were not able to make full payment and we discovered that 80% of the employers were able to make full payment but 20% of them, were unable to pay due to financial difficulties and, in some cases, even business closures. As a result, there was no recourse for the workers and for the Labour Court to recover the payment.

We take this seriously. Our sympathies are with the workers because they work hard for the money. MOM is doing two things: firstly, those workers who are not covered under the Employment Act, today, when they face a problem of salary non-payment, they have to take civil action, which can be protracted and costly. By the end of this year, we will be setting up the Employment Claims Tribunals so that workers, including managers, executives, even CEOs, who are earning more than $4,500 and not covered under the Employment Act, will be able to have access to the Employment Claims Tribunals. At the same time, in order to reduce and minimise the number of cases where the employers are not able to make any

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payment due to financial difficulties, MOM, together with the tripartite partners, is looking into how we can enhance the protection for workers in a more holistic manner.

15 Dr Janil Puthucheary asked the Deputy Prime Minister and Minister for Home Affairs (a) whether existing penalties are sufficient deterrents against serious crimes, such as vandalism or hurt, committed by youths and young persons; (b) if not, whether there are plans to strengthen the current laws; and (c) whether the Ministry is considering alternative mechanisms to discourage such behaviour.

(for the Deputy Prime Minister and Minister for Home Affairs): Mdm Speaker, persons who commit serious crimes, such as vandalism, hurt or other offences, that affect public well-being, safety and security should be severely punished. This also applies to young offenders. The law provides a range of punishments and rehabilitative options that the Courts can impose as appropriate. These include options, such as community-based rehabilitation, probation, placement in a juvenile rehabilitation centre, reformative training, fines, caning and imprisonment.

The penalties provided in the law for serious offences, including vandalism and hurt, are generally adequate. Vandalism is a serious offence, especially where it defaces public facilities or property, is designed to draw wide public attention to the act of lawlessness or involves indelible substances making removal difficult or costly. The maximum penalty for vandalism is three years' imprisonment or a fine of up to S$2,000. There is a mandatory minimum of three strokes of the cane but not more than eight, unless the act was committed with a delible substance. For the offence of voluntarily causing grievous hurt, the maximum penalty is 10 years' imprisonment and a fine or caning. This increases to life imprisonment or up to 15 years' imprisonment and a fine or caning if grievous hurt is caused by dangerous weapons and means.

In deciding on the appropriate sentence, the Courts will generally weigh the gravity of the offence committed, together with factors, such as proportionality and the individual circumstances of the offender. This includes the offender's age, antecedents, culpability, aggravating and mitigating factors. The Courts would also need to consider what is in the public interest. For example, it would not be in the public interest to have youth crimes take root in society or go out of control. While rehabilitative options are available for young offenders who are suitable, the Courts have also meted out more severe punishments if the offence was a serious one, including deterrent sentences to send a strong signal that such criminal behaviour will not be condoned nor taken lightly. In appropriate cases, the Public Prosecutor may appeal against the sentence if it is inadequate or does not reflect the

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seriousness of the offence committed.

In recent years, young offenders have received stiff sentences and caning for committing vandalism and hurt. In 2014, three young men aged between 22 and 26 were sentenced to varying terms of imprisonment and three strokes of the cane each for vandalising public property with messages supporting the criminal activities of the hacking collective Anonymous. In 2013, three young men aged between 19 and 21 were sentenced to imprisonment terms of between two years six months and three years six months, and received between four and six strokes of the cane, for rioting and slashing a full-time National Serviceman in an attack at a shopping complex in Orchard Road. These sentences give the community the assurance that safety and security are being safeguarded.

Having said that, young offenders may also be sent for reformative training at Changi Prison Complex. The regime is strict, tough and has a strong emphasis on discipline. However, some younger offenders can benefit more from community-based rehabilitation, such as probation, which can include conditions, such as community service, curfew, electronic monitoring and hostel residency.

A key factor in reducing youth crime is high certainty of being caught and dealt with firmly. Prompt and effective enforcement by our law enforcement agencies, coupled with strict laws, are therefore, necessary. At the same time, it is also necessary to have crime prevention programmes jointly with schools and community partners to guide our youths and divert them from criminal activity.

The Ministry of Home Affairs (MHA) will continue to closely monitor the situation and regularly review the need to step up education, enforcement or impose additional legislative measures. MHA will also work with the Attorney-General's Chambers to press for deterrent sentences where these are warranted.

Dr Janil Puthucheary.

Mdm Speaker, I would like to ask the Minister a couple of supplementary questions, please. He has rightly pointed out the need for a significant deterrent effect. For youth offenders, the effectiveness of this may be reduced because of the lack of understanding and awareness. Are there further measures that the Ministry can take to work with at-risk individuals to try to prevent them from offending in the first place?

My second supplementary question is: of the youth offenders that he has identified, is there some sense how many of them were already previously identified as at-risk? Is that a

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difficulty that we face when most of them are not knowingly identified as being at-risk of committing such an offence?

Mdm Speaker, generally, youth crime has been on the decline and the Police have implemented many measures to engage at-risk youths. For example, there is the Youth Engagement Programme (YEP) developed by Police psychologists with inputs from the Ministry of Education (MOE), Ministry of Social and Family Development (MSF) and the Police to have activities planned throughout the year to engage these youths, occupy them, especially during holidays, particularly to steer them away from crime. One good example is the Delta League Sports Challenge, which is carried out in June and December, where many youths who have been identified to be at-risk have been engaged by the Police, given mentoring programmes, as well as professional coaching by our S-League teams, to give them a sense of purpose and divert them away from crime.

The Police have also been notifying parents when we meet their children hanging out late – we call this programme Youths Hanging Out Late initiative – so that parents and schools know that these children have been out there, maybe not under supervision, and that they should take notice.

We have also launched what we call the Youth GO! programme by the Central Youth Guidance Office. It is a pilot in the Northeast and Northwest districts to look out for youths who hang out late, beyond 11.00 pm. These youth workers go out beyond 11.00 pm to identify youths who are regularly out there, not under supervision, so that they can have a person they are familiar with who can work with them should they have issues and prevent them falling into crime.

Dr Janil Puthucheary.

Mdm Speaker, I had a second supplementary question about whether most youth offenders were previously identified as being at-risk individuals.

The Central Youth Guidance Office brings together MHA, MSF and MOE to look at the spectrum of risks that our youths may be exposed to. Some of them may just have some form of severe discipline problems in school. This does not necessarily mean they will fall into crime. But it would be good if we can engage them early, get them on board programmes that will put them on productive purposes so that they do not come into bad company. We do not generally want to just address youths at-risk. We want to make it as broad as possible so that even those at the fringes should be involved. That is the hardest part because those youths who have already been arrested and given stern warnings, we know who they are and we are engaging them. But the biggest problem

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is those who are at the fringes or suffering some form of problems at home or in school that we need to be aware of.

I am glad that the schools, together with MSF, MOE and MHA, are always working together to try and be inclusive and bring as many of them as possible on board; at the same time, not stigmatising them, to tell them that these are youths at-risk and we are working on them.

16 Assoc Prof Fatimah Lateef asked the Minister for Health whether there are plans to make it compulsory for general practitioners (GPs), family medicine practitioners and dental practitioners to enrol into the Chronic Disease Management Programme and Community Health Assist Scheme.

(for the Minister for Health): Mdm Speaker, since the inception of the Chronic Disease Management Programme (CDMP) and Community Health Assist Scheme (CHAS), there has been a steady increase in the number of clinics participating in both schemes. There are currently about 1,000 CDMP clinics, and 850 general practitioners (GP) and 550 dental clinics participating in CHAS. These make up more than half of all private medical clinics providing primary care and more than three quarters of all private dental clinics island-wide.

We acknowledge that some providers prefer not to participate in these schemes for various reasons. While the Ministry of Health (MOH) does not currently have plans to make it compulsory for primary care providers to enrol into CDMP or CHAS, we strongly encourage primary care providers to join the schemes. This enables Singaporeans to access subsidised care and tap on MediSave at more primary care providers, improving the accessibility of affordable primary care. It also enables our GPs and Family Physicians (FPs) to participate more actively in the management of chronic diseases.

There are various ongoing publicity and outreach efforts, such as regular road shows and engagement sessions, where interested providers can find out more about the schemes. We will continue to work with the Agency for Integrated Care (AIC) to encourage more clinics to participate in CDMP and CHAS.

Assoc Prof Fatimah Lateef.

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Assoc Prof Fatimah Lateef (Marine Parade): Mdm Speaker, can I ask the Minister of State, besides the encouragement and education that we are doing, are there more proactive steps that we can take to engage these GPs, knowing that the ageing population is a tremendous thing that we are going to be facing in the next few years, and also knowing that, in some estates, we do have maybe just one CHAS or CDMP GP providing care for the whole estate? That seems inadequate. What are some of the proactive steps that we can take?

I would like to thank the Member for the supplementary question. What is important is to find out the exact reasons from GPs on their reluctance to participate in CDMP and CHAS. Some of these reasons received from GPs include GPs being satisfied with their own current patient load; some GPs also perceive that the additional administrative burden that comes along with the schemes is quite onerous; some GPs are also quite concerned about the audit process, especially the amount of effort that is needed in the process, such as time needed to retrieve and photocopy relevant documents for the audit; and some GPs are not keen to take on a larger chronic caseload.

Having engaged all these GPs, MOH will continue to streamline and simplify these processes so as to facilitate the GPs and dental practitioners in taking up both schemes.

Mr David Ong.

Mdm Speaker, I would like to ask the Minister of State what the penetration rate is like for GPs participating in CHAS in the HDB heartlands, and whether the Ministry is happy with the current state of affairs.

Based on current statistics, up to about 65% GP clinics are on CDMP and 55% of GPs are on CHAS.

Ms Tin Pei Ling.

Mdm Speaker, I would like to ask the Minister of State, whether there is a timeline that MOH is looking at or a milestone kind of timeline in terms of getting these GPs on board. Just as hon Member Assoc Prof Fatimah had said, it is very important that we promote this because we are having an ageing population and a lot of elderly residents have given us feedback that they really hope that there will be more GP clinics that are accessible to them and where they can, at the same time, readily enjoy the subsidies that the Government has been offering?

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I would like to thank Ms Tin for the supplementary question. We do not have any timelines currently. Having said that, we are quite encouraged by the take-up rate from GPs as well as dental practitioners over the past one to two years. MOH will continue to put in the effort to engage these practitioners so that we can increase the take-up rate as much as possible.

17 Mr Png Eng Huat asked the Deputy Prime Minister and Minister for Home Affairs (a) from 2010 to 2014, what are all the universities that new citizens and permanent residents have declared to ICA as the awarding institution of their highest qualification when applying for citizenship and PR status respectively; (b) how does ICA check the validity of such educational qualifications listed in these applications; and (c) whether ICA keeps a list of suspected degree mills to aid the verification process.

(for the Deputy Prime Minister and the Minister for Home Affairs): Mdm Speaker, every Permanent Residency (PR) or Singapore Citizenship (SC) application is evaluated on a range of criteria, including economic contributions, qualifications, age, family profile and length of stay in Singapore. An individual's educational qualification is never the sole determining factor for granting PR or SC. The educational qualifications declared by applicants include those from public and private institutions in Singapore, as well as from institutions in other countries.

The Immigration and Checkpoints Authority (ICA) has multiple levels of checks when processing applications for PR and SC. These include requiring the applicant to produce the original documents for sighting, verification of documents with the issuing authorities overseas and face-to-face interviews with applicants.

We take a very firm stand against individuals who provide false information or who make any misrepresentation in their PR or SC applications. They will be dealt with firmly under the law and their PR or SC status, if granted, may be revoked or deprived respectively.

18 Prof Tan Tai Yong asked the Minister for Education (a) whether there are avenues for private GCE "O" level candidates to interact with students and make use of the facilities, such as laboratories and sports equipment, in mainstream schools; (b) whether the Ministry can consider a structured programme for these private candidates to participate as CCA members outside of the formal curriculum; and (c) whether the same sort of integration can

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be done for primary school children who are home-schooled.

(for the Minister for Education): Madam, the profile of Singaporean private GCE "O" level candidates is quite varied, but candidates may be broadly grouped as: (a) those for whom enrolment in a mainstream school would not be educationally meaningful or age-appropriate; and (b) those who voluntarily opt out of our mainstream school system.

The first group of private GCE "O" level candidates includes adult learners studying one or two subjects on a part-time basis. It also includes students who had completed their secondary school education, are more than four years above secondary school age or are already eligible for progression to a post-secondary educational institution but, nevertheless, had chosen to repeat specific GCE "O" level subjects as private candidates.

Co-curricular activities (CCAs) are part of the school curriculum and the holistic education of students in mainstream schools, tailored to the students' age profiles and conducted under the supervision of their teachers who exercise a duty of care towards them. For private candidates who are much older than the secondary school age, interaction with secondary school age students and participation in our schools' CCAs would not be age-appropriate. It is also not easy to accommodate their work or post-secondary education commitments. Instead, there are many community groups that these private candidates can join to interact with the community and to learn life skills, such as those in community clubs.

Similarly, science laboratories contain potentially hazardous equipment and materials and are not suitable for unsupervised use. Students who take their GCE "O" levels at the Institute of Technical Education under the General Education Programme will have supervised access to science laboratories in selected schools, if they offer Science subjects.

Sports facilities in schools, which are more suitable for unsupervised shared use, are already shared with the community outside school hours under a partnership between the Ministry of Education (MOE), Sport Singapore and the People's Association.

The second group of private GCE "O" level candidates include students in private schools. For this small number of students in private schools, their schools are expected to provide appropriate facilities and educational programmes for them.

As for primary school children who are home-schooled, these students have specifically applied to be exempted from enrolment in mainstream schools. If they wish to benefit from the facilities and programmes in our mainstream schools, the Ministry will facilitate their entry as a student into our mainstream schools. It remains the Government's preference that

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all Singaporean children attend mainstream schools so that they grow up together with a common educational experience.

Order. End of Question Time.

[Pursuant to Standing Order No 22(3), provided that Members had not asked for questions standing in their names to be postponed to a later Sitting day or withdrawn, written answers to questions not reached by the end of Question Time are reproduced in the Appendix.]

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[(proc text) presented by the Minister for Culture, Community and Youth and Second Minister for Communications and Information (Mr Lawrence Wong); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

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[(proc text) presented by the Minister for Culture, Community and Youth and Second Minister for Communications and Information (Mr Lawrence Wong); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

[(proc text) "to xxxxx", (proc text)]

[(proc text) presented by the Senior Minister of State for Finance (Mrs Josephine Teo) on behalf of the Deputy Prime Minister and Minister of Finance; read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

[(proc text) "to xxxxx", (proc text)]

[(proc text) presented by the Senior Minister of State for Law (Ms Indranee Rajah) on behalf of the Minister for Law; read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

[(proc text) "to xxxxx", (proc text)]

[(proc text) presented by the Senior Minister of State for Transport (Mrs Josephine Teo) on behalf of the Minister for Transport; read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

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[(proc text) "to amend the Institute of Southeast Asian Studies Act (Chapter 141 of the 2013 Revised Edition) and to make consequential amendments to certain other Acts", (proc text)]

[(proc text) presented by the Minister for Education (Mr Heng Swee Keat); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

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[(proc text) Order for Second Reading read. (proc text)]

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

Singapore's financial centre has contributed significantly to our economic growth and development. However, the size and international reach of our financial sector also expose Singapore to money laundering and terrorism financing risks. To mitigate these risks, the Monetary Authority of Singapore (MAS) has in place a robust preventive regime that combines stringent admission and licensing requirements, rigorous supervision, and strong enforcement measures.

MAS reviews this regime regularly to keep pace with the constantly evolving threats, as well as with developments in international standards and best practices.

The proposed amendments will strengthen MAS' supervisory powers in relation to anti-money laundering (AML) and countering the financing of terrorism (CFT). And I will use the acronyms AML and CFT to describe these efforts. They will also enhance MAS' ability to cooperate with its foreign supervisory counterparts. These changes will align our regime with the international standards set by the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision.

MAS had sought public consultation on these changes. The feedback received has been carefully considered and incorporated into this Bill.

Mdm Speaker, I will now go through the main amendments of the Bill.

First, on the AML/CFT requirements. Customer due diligence and record-keeping requirements are fundamental to an effective AML/CFT regime. In its revised standards, FATF has recommended that these requirements be set out in primary legislation to demonstrate a country's commitment to combat money laundering and terrorism financing. Consequently, countries like the United States (US), Australia and New Zealand have done so.

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The financial institutions in Singapore are already required to carry out due diligence measures to know their customers well and to monitor their transactions for suspicious activity. Financial institutions are also required to maintain proper records to facilitate AML/CFT supervision and investigation into any possible criminal activity.

The amendments in this Bill will now embed in the MAS Act a general requirement to conduct customer due diligence and to maintain records.

The detailed requirements for customer due diligence and record keeping are currently applied through Notices issued by MAS, and this will continue to be the case.

Next, let me set out the powers to conduct AML/CFT inspections and the authorisation for such inspections as laid out in this Bill.

The power to conduct inspections is essential to checking that financial institutions comply with the AML/CFT rules. Currently, MAS' power to carry out inspections is found in sector-specific legislation like the Banking Act, Insurance Act and Securities and Futures Act. For greater efficiency and consistency, these powers will now be centralised in the MAS Act. Specifically, the new provisions will vest MAS with the power to inspect financial institutions for compliance with directions or regulations relating to Singapore's international obligations, like the United Nations (UN) Security Council Resolutions on sanctions and the prevention of money laundering and terrorism financing. It will also enable MAS to appoint a third party, like an auditor, to inspect a financial institution on MAS' behalf.

MAS may currently approve an inspection of a foreign financial institution in Singapore by its "home prudential supervisor" to facilitate effective consolidated group supervision. However, in certain jurisdictions, like in Australia, the responsibility for AML/CFT supervision resides in an authority that does not have prudential supervision responsibilities, meaning to say, that they have two separate regulators – one in charge of AML/CFT and another to oversee financial prudential standards.

The amendments in the Bill seek to empower MAS to approve inspections in Singapore by the home AML/CFT supervisor, whether or not it is also the financial institution's prudential supervisor. And MAS' written approval must be obtained for this purpose.

Third, I will elaborate on the powers to share information, subject to strong safeguards that we have put in place in this Bill.

To enhance cooperation between MAS and its foreign AML/CFT counterparts, the Bill will introduce powers to allow MAS to share information to facilitate the AML/CFT

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supervision of financial institutions originating from its counterpart jurisdiction. MAS will also be able to make AML/CFT supervisory enquiries on the counterpart's behalf.

Any information shared with MAS' counterpart may be used by them only for AML/CFT supervisory purposes. Nevertheless, MAS may give its consent, upon the request of an AML/CFT supervisor, to allow information that has been shared for AML/CFT supervisory purposes to be shared with a third party, in appropriate circumstances. And such onward-sharing of information will be subject to strict confidentiality safeguards set by MAS.

Legislative safeguards have been included to prevent "fishing expeditions" and other forms of abuse. For example, assistance will only be rendered in relation to bona fide requests and the foreign AML/CFT supervisor has to undertake to use the information only for the purpose that is specified in the request and to protect the confidentiality of any information obtained.

On the domestic front, the amendments will enhance MAS' ability to share information with relevant Singapore authorities for the purposes of taking AML/CFT supervisory, investigation or enforcement actions in a timely manner.

Mdm Speaker, in conclusion, all governments have to play their part in the fight against the ever-present threat of money laundering and terrorism financing, and even more so for international financial centres like Singapore. In its recent assessment of Singapore's compliance with the Basel Core Principles for Effective Banking Supervision, the International Monetary Fund (IMF) recognised that MAS has in place a strict AML/CFT regime. Even so, in light of the constantly evolving threat, it is important that we continually review and enhance our regime to align it with international standards and best practices. The introduction of the MAS (Amendment) Bill represents Singapore's resolve to maintain the high standards of integrity and trust in our financial system. Mdm Speaker, I beg to move.

[(proc text) Question proposed. (proc text)]

Mdm Speaker, the introduction of this amendment Bill and its enhancements aligns Singapore with the international AML/CFT standards set by FATF.

I support and welcome the introduction of more measures to counter money laundering and terrorism. Singapore has a legal system in place to apply targeted financial sanctions regarding terrorism financing. However, there are technical shortcomings which

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may affect the effectiveness of the proposed amendments to this Act.

Financial institutions are first in the front-line to inform MAS of any suspicion but, at the same time, they are put in a difficult position of keeping their clients' confidentiality and meeting their own key performance indicators (KPIs) in the face of intense competition.

While the Bill addresses anti-terrorism, I am afraid this Bill may not be effective in keeping financial institutions in check as they are put in a position of holding dual conflicting roles.

This Bill also does not address extradition. Cross-border and international white collar crimes make it difficult to catch money laundering criminals. Countries should constructively and effectively execute extradition requests in relation to money laundering and terrorism financing without undue delay.

Mdm Speaker, I would like to propose that the Bill address the following:

money laundering and terrorism financing are extraditable offences;

have clear and efficient processes for the timely execution of extradition requests, including prioritisation of cases, where appropriate;

a case management system with rigorous supervision be maintained to monitor progress; and

ensuring an adequate legal framework.

In addition, the Accounting and Corporate Regulatory Authority Act (Cap 2A) (ACRA) has been amended and a new Part VIA1 introduced to enhance the regulatory framework for corporate service providers, comprising registered filing agents and registered qualified individuals, such as solicitors, accountants and advocates.

Under this Act, a new set of Accounting and Corporate Regulatory Authority (Filing Agents and Qualified Individuals) Regulations 2015 sets out further requirements on this enhanced framework.

Under Recommendation 8 of FATF (Financial Action Task Force), ACRA will also have more scrutiny on non-profit organisations – corporates limited by guarantees (CLG).

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I feel that this MAS Bill should be read concurrently with the ACRA (Amendment) Bill or perhaps make it into an omnibus MAS-ACRA Bill, providing more enforcement powers over professional firms and corporate service providers. There should also be some provisions to ensure that MAS scrutinises law firms, accounting firms and charities and companies limited by guarantee.

Many accounting firms, law firms and corporate service professional firms are tasked to incorporate foreign companies and foreigners with paid-up capital funds from other countries.

Most criminals and scammers do their money laundering by setting up shell companies with post office (PO) boxes as registered and mailing addresses in Singapore. MAS needs to provide and train bankers, bank officers, lawyers, accountants to detect such suspicions, especially those that are classified in the high-risk range which include politically-exposed foreigners and organisations from countries and territories and their unrealistic turnover in client business accounts with no apparent business and low paid-up capital.

Section 30ZC (5), under assistance that may be rendered to domestic authority, the Bill should also address the confidentiality clauses that bind lawyers under the Legal Profession Act. This Bill should ensure that lawyers are able to break all confidentiality without the worry of the Legal Profession Act in place.

In 2012, there was a case in France in which a lawyer was taken to task for reporting the origin of his client's money. While client-attorney privilege is important, the French court concluded that the obligation to report suspicions did not represent a disproportionate interference with lawyers' professional privilege and that there had been no violation.

Last but not least, the ACRA Act also addresses non-profit organisations (NPOs) and religious bodies. Increasingly, activities are linked to terrorism and its financing, including the use of NPOs for terrorism financing. Therefore, I would again ask the Minister whether the MAS Bill should be read concurrently with the ACRA Act as they both share the same purpose, as the Bill and Act will raise NPOs' awareness of possible misuse of their organisations for money laundering and terrorism purposes. Enforcement authorities should also periodically monitor NPOs which are reasonably suspected of such activities.

Mdm Speaker, I stand in support of the MAS (Amendment) Bill. Singapore has grown significantly over the past decade or so to become one of the world's leading wealth management centres. This growth reflects the trust that

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high net worth individuals have in Singapore. And this trust is precious and hard-earned. Singapore must defend her reputation for being a well-regulated financial centre that abides by international standards for anti-money laundering and counter terrorism financing.

With the crackdown on corruption intensifying in China and Indonesia and with the expanding grip of ISIS, the Bill could not be more timely. I would, however, like to make two observations.

One, the codification of customer due diligence requirements is, certainly, a large step in the right direction. We have heard stories of how businesses have migrated from one financial institution to another in search of lower account opening due diligence requirements. Some have experienced how one bank might ask fewer questions about the provenance of funds compared to another bank. How will MAS ensure that the playing field is level for all banks and that there are no loopholes or leakages?

Two, stepping up international cooperation and information exchange is important, given the increased cross-border mobility of capital. However, banking confidentiality, which has been an important foundation of success, continues to be critical. We must safeguard against spurious international requests, and also safeguard bona fide client confidentiality. In addition to paragraph 30Z on the Conditions for Provision of Assistance to AML/CFT authority, can the House be provided with more concrete details about how these safeguards will work in practice?

Mdm Speaker, I declare my interest as a professional working in the banking industry. I spoke in the House during the Second Reading of the amendment of the Terrorism (Suppression of Financing) Act (TSOFA) in 2013. The amendments were to increase the maximum fine for terrorism financing offences, make tipping-off an offence, protect the identity of informers, refine the exemption provisions and to consolidate the terrorism financing provisions under TSOFA. Singapore has, over the last few years, aligned the Banking Act and the Insurance Act as well. These reviews and updating of our laws show our commitment to fight money laundering and to counter terrorism financing.

We are a fast-developing pre-eminent financial centre. Over the years, the financial sector has seen an exponential increase in the number of transactions and an increase in players in the form of financial institutions globally operating in and through our front yard. The Government and the regulators have put in place a tough regime that includes much of the prudence I spoke about during the Second Reading of TSOFA. I likened the regulators to

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the constructors of a shark net protecting the swimmers in a lagoon. They are also the lifeguards, the inspectors of the nets and the ones keeping up-to-date with technology and innovation to improve the reliability of the shark nets and, therefore, the safety of the swimmers.

Our financial sector is the lagoon that financial professionals and financial institutions operate in. Sharks are known to penetrate shark nets and cause serious injuries to swimmers and fatal attacks are not rare. Translate that into our financial sector, an important engine of Singapore's survival, it would damage our reputation as a financial centre. To not have AML and CFT elements penetrate our strict standards and regime is unrealistic.

The proposed amendments to the MAS Act will once again show our commitment to be part of the international effort to fight money laundering and counter financing of terrorism. The amendments will further place Singapore in the forefront in banking supervision and demonstrate our commitment to be a pre-eminent financial centre.

Mdm Speaker, I would like to touch on three aspects that I feel is important to highlight, which the Bill serves to achieve.

First, the Bill gives MAS the power to conduct AML/CFT inspections to an expanded range of financial institutions, particularly holders of stored value facilities and non-bank credit card or charge card issuers. This is an important move in the fight on AML. Ask any banker and they will tell you their antennae are raised if they hear from prospective clients that they deal with non-bank financial institutions. In practice, this would trigger enhanced due diligence processes. Bringing such vehicles into the fold under the Bill is to be applauded. Such vehicles count amongst the tools in the arsenal of money launderers.

The second aspect I would like to touch on is the introduction of "Assistance to Foreign Authorities and Domestic Authorities for their Supervisory and Actions in respect of Money Laundering, Financing of Terrorism and other Offences". While I am glad to see that there are legislative safeguards to prevent "fishing expeditions" and the abuse by a foreign AML/CFT supervisory body, I would like to hear even more from the Minister the oversight and administration to ensure that the safeguards are, indeed, adhered to in practice. Some of the concerns were alluded to by Dr Benedict Tan a moment ago.

As important as Singapore's financial sector to be part of the global effort in anti-money laundering and counter-terrorism financing is, we must also ensure that this role, commitment and stance do not impinge upon the understanding and branding of Singapore as a banking centre where the clients or would-be clients of financial institutions place their

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trust that their banking and personal information is well-guarded.

Lastly, to have customer due diligence enacted as a primary legislation to be consistent with other jurisdictions also demonstrates our commitment to FATF and the Basel Committee on Banking Supervision. This would even send a stronger signal to professionals in the industry that customer due diligence and the maintenance of transaction records and the review of the same will ensure that our surveillance "radar" is always up. Proper retention and maintenance of records will be a focus when the situation arises where MAS or the foreign supervisors need to carry out investigations related to AML and CFT.

The current situation where radicalisation and ease of terrorist recruitment, helped by the social media, is a concern for many security agencies across the world. Amongst clients that a financial institution may have or may already have, there may exist one or some who may be or have grown to be sympathisers of a particular group. They may have had a long and cosy banking relationship stretching back many years. Customer due diligence and transaction records will certainly throw light on the changes in the account conduct and client behaviour. Madam, I support the Bill.

Mdm Speaker, I thank the Members who have spoken and for their support of the Bill.

I think all the Members who spoke – all three – highlighted the importance and relevance of ensuring that our AML and CFT laws remain relevant and effective in the face of recent developments. The Members have also raised several issues and I will address them in turn.

First, Dr Benedict Tan asked how MAS can ensure a level playing field for banks with regard to the implementation of customer due diligence requirements. Madam, as I mentioned earlier, detailed customer due diligence requirements are set out in the AML/CFT Notices issued by MAS to financial institutions. The Notices specify what customer due diligence entails and the specific requirements.

Mrs Lina Chiam alluded to the fact that these requirements may put banks in a conflicting position between developing and growing their business and being subject to these regulatory requirements. But, Madam, I would say that all the banks and financial institutions around the world understand that there is a need, in today's environment, to perform such functions to be able to identify and verify the customer's identity, screen customers against sanctions lists and other published databases. This is not an imposition or

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additional requirement. This is basic to what a bank should do and it is essential, in fact, in preserving trust and integrity in order to develop the banking sector. In fact, these requirements are benchmarked against international standards set by FATF, as well as industry best practices.

MAS supervises the financial institutions for compliance with these Notices. Where deficiencies are identified in a financial institution, MAS will require it to take prompt remedial actions and update MAS on the completion of these remedial actions. MAS may also require the financial institution to appoint an independent third party to certify that the measures have addressed the deficiencies.

I would like to assure Members that MAS takes a serious view of any breach of the Notice and will take appropriate regulatory actions. Depending on the severity of the breaches, these range from formal warnings, reprimands, restrictions on operations, financial penalties to the revocation of licences.

Mr Arthur Fong likened financial regulators, like MAS, to builders of a shark net to protect swimmers in a lagoon from the sharks. I would say it is a very vivid analogy. While MAS may be responsible for setting the AML/CFT rules, the integrity of our financial sector is a collective responsibility. Industry stakeholders play a critical role in making sure that these rules translate into an effective regime. We must all work together to make an effective net.

Both Mr Arthur Fong and Dr Benedict Tan asked for more details about how the safeguards for international cooperation will work in practice. Madam, the sharing of information with foreign supervisors is intended to support the effective AML/CFT supervision of international financial groups. While customer information may be relevant in certain cases, information requests will, generally, relate more to the financial institution itself, such as its policies and procedures, management or control structure information, control lapses that may be identified through inspection and supervisory actions taken against the institution.

I had earlier highlighted the key safeguards for ensuring that only bona fide requests are acceded to and that the information shared is kept confidential. To facilitate MAS' assessment, the Bill requires that the foreign supervisor be specific on the purpose of the request, the nature of the assistance and the relevance of the information requested, to the foreign supervisor's oversight of the institution it is in charge of. This will address some of the broad requests with tenuous grounds that are typical of the "fishing expeditions" that Mr Arthur Fong mentioned.

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To mitigate the risk of misuse or leakage of the information, the foreign supervisor is required to undertake to safeguard the confidentiality of the information and to use the information only for the specified purpose. MAS will be able to reject any future requests for information by the foreign supervisor if MAS finds that it has breached any of the undertakings.

The Act further requires that the information requested be proportionate to and is of sufficient importance to the supervisory issues that are raised, and that the matter to which the request relates to should be of sufficient gravity. Based on these criteria, detailed assessments will then be made, taking into account the specific facts of each case. This proportionate approach taken by MAS is provided for in international standards, including those set by FATF.

Mrs Lina Chiam mentioned that this MAS Bill has to be taken holistically, together with the ACRA Bill and other enforcement and legal aspects, and I agree that combating money laundering and terrorism financing is really a multi-agency effort, I would like to assure her that we do have an overall multi-agency effort in place to look at this holistically.

There is a Steering Committee on AML/CFT. All the various agencies – the Ministry of Home Affairs, MAS and Ministry of Finance – are involved. On the enforcement side for money laundering and terrorism financing, we have agencies like the Police, Commercial Affairs Department and Central Narcotics Bureau working on this. On the legal side, the Ministry of Law and Attorney-General's Chambers are involved and, on the financial side, MAS is the integrated financial supervisor overseeing AML/CFT issues for the entire sector, including the banking, securities and insurance industries. MAS works very closely with other non-financial sector supervisors, including the Casino Regulatory Authority and ACRA.

This is our whole-of-Government, multi-agency effort. We are not doing this in a piecemeal fashion. We are doing it holistically but, for now, we are presenting the MAS Bill, focusing on the amendments relevant to MAS' role.

Madam, I believe I have addressed the questions raised by Members. Once again, I thank the Members who have spoken for their support of the Bill and for their clarifications and I would encourage Members of the House to give their support to the Bill.

Madam, the amendments will reiterate Singapore's commitment to the global fight against money laundering and terrorism financing. Singapore's financial sector is built on integrity, trust and professionalism. Our continued growth is only possible if we have a clean regime that safeguards legitimate funds and weeds out tainted money.

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[(proc text) Question put, and agreed to. (proc text)]

[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]

[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lawrence Wong]. (proc text)]

[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]

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3.31 pm

[(proc text) Order for Second Reading read. (proc text)]

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

The Government announced in March 2015 the introduction of Singapore Savings Bonds, a new type of Government security. The Bill before the House amends the Government Securities Act to allow the Government to issue the Savings Bonds as non-tradeable securities, which is a key design of the Savings Bonds to protect individuals from capital loss.

The Government is introducing the Savings Bonds programme to provide individual investors with a long-term savings option that offers safe returns. Unlike in other countries, we do not issue bonds to fund Government expenditure. Where bonds are issued, they are for the purpose of helping to develop the local bond market. The proceeds of these issuances cannot be spent but must be invested instead.

Madam, I will now go through the key features of the Savings Bonds.

Savings Bonds are safe investments, as both the principal and interest payments are guaranteed by the Government.

In addition, individuals have the flexibility to redeem their bonds at par from the Government in any given month, which means that they will get back in full the initial purchase price with no risk of capital loss. And, unlike fixed deposits for which early withdrawals means forgone interest payments, holders of the Singapore Savings Bonds get to keep the interest paid out at six-monthly intervals even if they redeem the bond before the full bond tenor.

The interest payments are also designed to "step-up" every year, with each year's interest payment being larger than the one before. In the first year, the total interest payments result in an annual interest equivalent to that of a conventional one-year Singapore Government Security, commonly known as SGS. After five years, the average earned interest per year will match the return of a five-year SGS issued at the point of purchase. By the end of the 10th year, the total interest payments result in an average annual

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interest equivalent to that of a conventional 10-year SGS issued at the point of purchase.

These features mean, in effect, that individuals do not need to commit to the investment period upfront but will still get to enjoy the higher returns of a longer-term investment.

The Government will make Savings Bonds easily accessible to individual retail investors: new bonds will be issued every month for at least the next five years. For 2015, the Government could potentially issue between $2 billion to $4 billion of Savings Bonds, depending on demand. The Monetary Authority of Singapore (MAS) will announce each month's issuance size on the first business day of that month. Individuals can apply for the bonds via ATMs of participating banks, at a transaction fee that is charged by the banks. In any month, individuals will be able to apply for the bonds with as little as $500. For a start, each individual can apply for up to $50,000 per issue and can hold up to $100,000 of Savings Bonds at any point in time. The Government will review these caps if there is a need to after the programme has been in place for some time.

Madam, it is the Government's intention to enable all individuals to have access to the Savings Bonds. There is, therefore, no need to rush and buy these bonds. If total applications exceed the total issuance size in a particular month, MAS will allocate bonds to all applicants in increasing multiples of $500. The allocation to each individual will stop when the individual gets the full amount applied for, or when all the available bonds have been allocated, whichever comes first. This means that smaller applications will have a higher chance of receiving the full allotment, and individuals with larger applications may not get the full amount that they have applied for.

Madam, let me now go on to explain the amendment in the Bill.

The Government Securities Act currently allows Government securities to be transferred and pledged. This means that securities-holders can freely transfer ownership to other parties or trade the securities in the open market. The Bill proposes an amendment to allow the Government to impose restrictions on such transfers and pledges in future new issues. This change will allow Savings Bonds to be issued as non-tradeable securities.

The change is necessary to protect individuals from capital losses. When interest rates rise, instead of selling the bonds in the open market at a price that is possibly lower than the purchase price, individuals are assured of getting their full capital back should they decide to redeem the bonds with the Government. On the other hand, when market interest rates fall, while bond-holders will not enjoy possible price appreciation or capital gain, they would benefit from the higher-than-market interest rates of their existing Savings Bonds which had

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been locked in at the point of purchase.

The restrictions on transfers and pledges of Government securities will be set out in the terms of issue for the Savings Bonds. Conventional SGS are not affected and will remain tradeable.

MAS is working with the banks to set up the systems and launch the first tranche of the Savings Bonds by the second half of 2015. The exact launch date will be announced later. Mdm Speaker, I beg to move.

[(proc text) Question proposed. (proc text)]

Mdm Speaker, first and foremost, I would like to declare my interest that I work in a financial institution and do engage in bond trading activities in my professional work. This amendment to the Government Securities Act facilitates the issuance of a new class of non-tradeable securities to the public.

I support the amendments and the ensuing introduction of the Savings Bonds. There are three reasons why. Firstly, it is an investment with almost zero risk of default, being issued by a rated sovereign. It will appeal to investors with very low risk appetite. Secondly, it offers holders of the bond a long-term Government bond yield pick-up and at an affordable denomination of just $500. Thirdly, it does not impose penalty or price risk should investors need to encash the bond before the 10-year maturity, yet enjoy interest coupons even when redeemed earlier. In other words, it allows investors to enjoy the higher interest rate premium from the longer end of the yield curve without having to give up on liquidity.

In this day and age, where markets are volatile and full of surprises, and where investment products are increasingly complex, the Savings Bonds are just what some financially less literate individuals would need – the peace of mind of a safe credit and steady stream of returns with flexible redemption options.

Given the simplicity of Government-issued Savings Bonds, we can expect investors to be spared the many pages of terms and conditions of a typical investment product as well as both the fine and bold prints.

Of course, the other plus is that the transaction cost for such an investment is likely to be lower than those offered by financial institutions. Hence, it is most suited to ordinary investors who just want a simple and low-cost investment alternative with reasonable

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returns and flexible tenures for their financial planning as well as to meet their long-term retirement needs.

Currently, the closest comparable investment product is SGS, which comes in higher denominations and investors would have to take the price risk when it is sold, as the bond is traded in the secondary market.

From a risk-return analysis stand point, the Savings Bond is certainly of more value than SGS as it comes with a free put option for investors to put the bond back to the Government if they need the cash. In market terms, this is known as the "free lunch" part of the Savings Bond. When the bond is being put, investors still get the returns for the shorter tenure they hold.

Given this free put option feature, I agree that the bond should be targeted and limited to individual investors and not to institutional investors.

Also, there is a need for the cap as, otherwise, we may potentially see a huge surge in bank deposit withdrawals due to the attractiveness of the Savings Bonds. The implication is that it may push up bank interest rates and result in a tighter monetary condition in the financial system.

While it is mostly pluses for the Savings Bonds, I would like to point out a few areas where investors of Savings Bonds ought to take note of.

Firstly, the interest rate for the bond is fixed at the time of the purchase and does not change for the life of the bond. So, in a rising interest rate or rising inflation environment, the return of the bond might not keep up with inflation or with rising interest rates. Of course, if the investors of the Savings Bonds take the view that interest rate or the inflation is rising, the investors can redeem the bond early and re-invest later when the rates increase. But that would require investors to understand the interest rate market, which is not something that is easy for a layman to understand. Hence, I hope that Government would consider to also issue inflation-linked bonds in future so that there is a safe avenue for retirement savers to hedge the inflation risk other than by way of investing in stocks or property which come with downside risks.

Secondly, based on current SGS yields, the Central Provident Fund (CPF) rates still offer better returns. It still makes sense to save most of the retirement money in CPF LIFE. However, in times of a changing interest rate environment, retiring investors may need guidance as to whether they should maximise their savings in CPF or withdraw some of the

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funds to invest in Savings Bonds.

During the Ministry of Manpower (MOM) Committee of Supply debate, I am glad to learn that the Government will be providing guided one-to-one retirement planning service for CPF members approaching retirement. Savings Bonds should feature as another instrument in the portfolio of retirement planning and the guidance will be helpful to CPF members who are approaching retirement.

I have a few questions for the Senior Minister of State. Firstly, can the Savings Bonds be transferred to or inherited by their beneficiaries should the investors pass away? Secondly, how would the Government intend to use the funds raised from the Savings Bonds the market condition does not have the opportunities where the Government could invest at a return higher than what the bond is paying and whether there will also be an overall cap as a proportion of the Government's total debt? Thirdly, would the Statutory Boards also consider issuing Savings Bonds in future?

Mdm Speaker, with our society ageing rapidly and individuals needing to save even more due to increasing longevity as well as in anticipation of the rising cost of healthcare, the Savings Bonds is a thoughtful initiative by the Government to help Singaporeans better plan for retirement and is another compelling investment alternative worth considering for the public at large. Madam, I support the amendment Bill.

Mdm Speaker, as the Senior Minister of State has explained, the amendment to this Bill is to prepare for the recently announced Government of Singapore Savings Bonds. The Senior Minister of State has also explained the mechanisms of the Savings Bonds. These bonds have a 10-year term with step-up interest and whose rates are linked to the long-term SGS rates. Unlike the existing SGS, the new Savings Bonds will not be transferable, hence, necessitating this amendment to the Bill.

Madam, I support the Bill.

Interest rates in Singapore have been low. The average member of the public has few alternatives to invest in very safe asset classes to meet their long-term financial goals and to save extra for retirement needs. Yields on bank savings have been extremely low. Fixed-term deposits, or FDs, with banks have slightly better rates but are of relatively short duration of up to around two years. Even with their better yields, fixed-term deposit rates from banks have lagged behind the inflation rate for many years already.

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Corporate bonds have better yields, but most required investments of $250,000 and above per transaction. More retail corporate bonds have recently been launched since changes to our policy on corporate bonds which have made it easier for companies to issue retail bonds. But the interest of companies to issue such bonds is still low. There are also risks in corporate bonds as they are primarily based on the financial stability of the issuing company. Ten-year SGS, whose recent yield has been between 2% and 3% per annum, can already be purchased in tranches of $1,000 and above. However, there appears to be low interest in SGS by retail investors. Not many understand the mechanism nor how to trade this on the secondary market, if they wish to cash out before maturity, and there may be capital loss when sold on the secondary market.

In the search for better returns on savings in this period of low interest rates and high liquidity, many small investors have dabbled in risky investments or penny stocks without fully understanding the risks, with some losing a good part of their hard-earned savings while trying to beat returns from bank savings. The to-be-launched Singapore Savings Bond is, therefore, a useful new instrument that can help the average small investor save for the long term and get yields close to the inflation rate. Investors should keep the Savings Bonds to maturity to maximise the returns but can sell back to the Government at any time at a lower interest rate, depending on the durations that the bonds had been kept for. They act like FDs offered by the banks but have more flexibility in withdrawals. SSBs could push banks to work harder on making their FDs more competitive.

I have three questions for the Senior Minister of State regarding these Savings Bonds.

First, I would like to know what will happen should a person who owns such Savings Bonds passes on. The Bonds will form part of his estate. However, this Bill makes such Bonds non-transferable. These Bonds would then have to be sold back to the Government and the monies returned to the estate. However, the family members would then lose the advantage of the step-up interest rates. Can the Bonds be transferable in the event of death if one wishes to hold on to the Bonds received through inheritance? Are there special circumstances where the Bonds can be made transferable?

Second, I would like to know how investors' education would be conducted with the launch of the Savings Bonds and how purchases can be made easily. I think the Bonds can encourage people with spare cash to save more for retirement in a safe instrument while maintaining the flexibility to cash out on the investments if needed. It would be a pity if the take-up rate is low due to a lack of understanding of the product and also due to maybe difficulties in purchase. The Bonds can be sold through existing financial institutions, as the Senior Minister of State has said. Are incentives attractive enough for banks to promote these Bonds, given that they may sell other instruments that may pay better commissions but may be riskier for investors? Furthermore, the Savings Bonds compete directly with FDs

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offered by the banks. So, banks may not be interested to market these.

Third, I understand from reports that there is a cap on the amount that can be invested on the Savings Bonds by any persons. I would like to know how the cap will be set because, if it is set too low, it may not be attractive enough to encourage retail investors to bother with yet another investment to keep track of. If yields on the Savings Bonds are equivalent to the SGS 10-year bonds, may I know why there is a need to restrict the amount that can be invested by any one person?

Mdm Speaker, I rise in support of the Government Securities (Amendment) Bill. We know the main reason for this deck of amendments is to facilitate the issuance of the Singapore Savings Bond. I applaud this move by the Government to introduce this "first-of-its-kind" and "one-of-its-kind" financial instrument for the benefit of the people of Singapore.

I recall after the sub-prime crisis in 2008 and the collapse of Lehman Brothers that many Singaporeans, including numerous organisations, suffered deep and painful monetary losses. Those affected delved into products, such as the High Notes and Pinnacle Notes, which were actually instruments whose risks were not apparent to many investors. Many Singaporeans burnt a big hole in their pocket thinking that 4% to 5% returns placed them in better stead for the same period than in fixed deposits and other structured instruments.

Since that saga, I believe many local investors have become more apprehensive and careful with the rich diversity of financial products available in the local market. There have also been many who have urged the Government to offer alternative savings plans, other than the CPF, which can afford security and guaranteed returns but allow for flexibility and liquidity. It is with this as a backdrop that this Bill is introduced and comes, with it, the new Singapore Savings Bond which will be introduced later this year to offer a new instrument which is safe, secure, guaranteed, flexible and yet affordable for the general populace to benefit and save their excess cash for a rainy day.

There are three reasons why I strongly support the introduction of these amendments and the Singapore Savings Bond.

Firstly, the building of retirement savings. The step-up interest provided under the Singapore Savings Bond encourages savings for the longer term yet does not penalise early termination nor withdrawals which sometimes are done for exigencies or a sudden need for cash. This will also fill the lacuna of fixed deposits which are traditionally for one- to two-

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and, sometimes, three-year periods. It also provides a much better yield than putting your cash into a savings account whose interests rates are a far cry and pale in comparison with the payoffs from the Singapore Savings Bonds.

Secondly, principal protection and it is flexible. Laudably, it is going to be a low-risk and safe long-term savings instrument for excess cash. The Singapore Savings Bonds will be backed by the Government and will not be traded and there is no risk that an investor gets back less than his investment. The flexibility also gives Singapore Savings Bonds an edge over a fixed deposit with a bank, which pays no interest if the principal is withdrawn before the account's maturity.

With the potentially low tranches in denominations of $500, many Singaporeans will be able to benefit from it. In particular, many middle-income Singaporeans, especially professionals, managers and executives (PMEs), and those who have cash in bank which they set aside for rainy days, can utilise this long-term and secure savings instrument and benefit from the steady interest payouts. This is particularly so as there is a cap in the amount which a person can lock into his CPF account as well as the Supplementary Retirement Scheme (SRS). Having this new instrument will provide more options and encourage more Singaporeans to build up their nest egg in a safe and flexible manner. This will also circumvent the unnecessary risks associated with instruments like those affected during the 2008 and 2009 financial crises.

Thirdly, there is no lock-in period and it is liquid. What is most attractive about this Savings Bond is that there will be no lock-in period as they are going to be issued at regular intervals and can be redeemed the same. There are also no penalties and one still earns the accrued interests for early redemptions. This will offer strong liquidity and also peace of mind for Singaporeans who place their monies in them.

Albeit a great boon for Singaporeans, I have some reservations and questions which I urge the Senior Minister of State to address and answer.

From a macro perspective, I wish to know the costs and estimated budget involved in running this scheme and the issuance of this new instrument as it is not clearly forecasted. Is it going to be sustainable for the Government to run this scheme in the long term?

Bankers and analysts have shared that there is, in fact, no need for the Government to raise capital this way. As such, I am concerned how the monies from these bonds will be utilised and how is the Government to hedge for market and economic fluctuations.

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How will the Singapore Savings Bond adjust and reflect market sentiments, especially when interest rates rise much above the coupon rate and in instances where they fall rock bottom or when inflation propels? With guaranteed and fixed interest payouts, how is the Singapore Savings Bond going to stay true to its credo of being flexible, safe and protected? On this note, I agree with hon Member Mr Liang Eng Hwa's suggestion of having inflation rate-linked bonds as well.

From a micro and individual investor point of view, it has not been shared how much the cap on the Savings Bond for each individual will be. I hope that all Singaporeans will be able to tap on this savings scheme and the cap be at a level which will benefit all Singaporeans, including those who have excess cash which they want to save for the longer term.

I am also urging if the Government can allow SRS monies to be used to purchase these bonds since, unlike CPF monies, SRS monies left with the bank earn a meagre interest rate.

In the same vein, I want to clarify that the interest earned from these bonds will not be taxable. If, indeed, they are going to be taxable, I urge the Government to consider rendering these special Savings Bond interests be made non-taxable to encourage savings.

Finally, I hope the Government will make the purchase and redemption of these bonds easy and accessible by all Singaporeans and only Singaporeans. The passing of this Act and introduction of this bond is a milestone. But the follow-through, implementation and execution will be crucial as the beneficiaries are individual Singaporeans. I urge the Government to enhance the communication of this product so that even more Singaporeans can be made aware and benefit from this scheme, particularly the middle-income and PMEs and any Singaporean who have cash to save for a rainy day. Mdm Speaker, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] With the amendment of this Bill, what is called Singapore Savings Bonds will be launched in the second half of this year.

The Savings Bonds have three benefits. First, it is a low-risk investment instrument. Second, it is also a low-cost instrument which you can invest in with as little as $500, and this will benefit many middle-income PMEs. Third, it is a flexible investment option which allows you to redeem at any time and you will not suffer any losses from early redemption.

The Savings Bonds is aimed at encouraging Singaporeans to make long-term investment and prepare for the rainy days by having another source of fund after retirement. The longer you hold, the higher the return. I would like to urge the Government to let Singaporeans know as soon as possible how to purchase the Bonds and what the caps will be and

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encourage Singaporeans to use this instrument as a long-term savings option.

(In English): I look forward to more details about the Singapore Savings Bond which should be issued in the coming months. I believe the Singapore Savings Bond will combine the flexibility of a short-term investment, the affordability of a low-cost product, and the stability of a long-term Government Bond and help Singaporeans build their nest egg.

Senior Minister of State Josephine Teo.

Mdm Speaker, I thank Mr Liang Eng Hwa, Mr Yee Jenn Jong and Mr Patrick Tay for their comments on the Bill. Let me address the points raised by the Members, together with some of the feedback that we have received from the public, on the Savings Bonds programme.

First, I would like to assure Members of the House and the public that the programme will not adversely impact the Government's finances. All proceeds from bond issuances cannot be spent but are instead invested. As a result, the Government's assets will increase by the same amount as its liabilities, leaving the Reserves unchanged. Overall, as a government, we continue to maintain our strong net asset position and expect the returns from investments to cover the interest cost of the bonds.

Additionally, the liquidity risk from the programme will be manageable as the total issuance is not expected to add significantly to the size of total Government borrowings. In any case, total Government borrowings will be kept within the limit authorised by Parliament under the Government Securities Act.

Mr Liang has asked if Statutory Boards will consider issuing Savings Bonds. The proceeds from bonds issued by Statutory Boards are used primarily to meet payments of development projects on a continuing basis. It may, therefore, be difficult for them to manage the liquidity required by the flexible early redemption feature of the Savings Bonds.

Mr Liang has pointed out that the cap on individuals' holdings of Savings Bonds will mitigate the programme's impact on the banking system. In addition, we expect the programme size to be small relative to total bank deposits and the impact on the banking system is, therefore, likely to be limited.

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I will now move on to address the questions raised on the features of the Savings Bonds.

Mr Tay has asked how the Savings Bonds will reflect market sentiments and remain flexible, safe and protected when there are market interest rate movements and changes in inflation.

Like the conventional SGS, the interest rates on Savings Bonds are set to compensate for expected future inflation. But interest rates on such bonds may not offer full protection against unexpected inflation. However, the key difference from conventional bonds is that holders of Savings Bonds enjoy full protection from price depreciation or capital losses. In the case of conventional bonds, which are tradable, prices fluctuate with interest rate changes. During a period of rising inflation expectations, interest rates may adjust upwards and cause the prices of conventional bonds to fall. Savings Bonds, however, can always be redeemed at the initial purchase price. This full-redemption feature of Savings Bonds prevents such rising inflation expectations from eroding the value of the savings.

I should add that the redemption and interest on Savings Bonds are guaranteed by the Government, which has received "AAA" credit ratings from international credit rating agencies, such as Standard & Poor's, Fitch, and Moody's, consistently since 2003. It is, therefore, a very safe investment option.

Mr Patrick Tay has noted that Savings Bonds have a fixed interest rate schedule, which provides greater certainty to individuals as the interest income will not fluctuate with market movements. It is fixed, it is locked in at the point of issue, the schedule is known to the person buying the Savings Bonds. And even if there are market changes in interest rates, that schedule will be honoured. When market interest rates fall, existing bond-holders will, therefore, benefit from receiving higher-than-market interest rates. On the other hand, when interest rates rise, bond-holders can make use of the flexibility of the early redemption feature to redeem their bonds, if they wish to do so. They can then re-invest the proceeds in the new issues of the Savings Bonds.

We have also received some feedback from the public on whether the Savings Bonds can be floating-rate bonds, where the interest rates move with the market. Some have also asked if new Savings Bonds can be issued to existing bond-holders automatically when interest rates rise.

The Government has carefully considered and decided against including these two features in the design of the Savings Bonds. Let me explain why.

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First, issuing floating-rate bonds creates more uncertainty for the individuals, as there would be both upward and downward movements over time. And, as I explained earlier, in a rising interest rate environment, the bond-holder can redeem his existing Savings Bonds at the initial purchase price and re-invest the proceeds by applying for new issues of the Savings Bonds. In this way, he can potentially enjoy higher interest rates without having to face the downside risks of floating interest rates.

Second, an automatic rollover into new Savings Bonds may not be beneficial for all bond-holders. To illustrate, take a 10-year Savings Bond issued in January 2016 that will earn 2.5% interest per annum if held to the full 10 years. Let us say that in the first year, this bond earns 0.9% and the interest rate will step up to 1.9% by the fifth year. Suppose in the fifth year, the bond-holder could also purchase a new 10-year Savings Bond issued at 3% interest which pays a first year interest of 1%. This is clearly not an attractive option, compared to the 1.9% he is already getting on his existing bond by then. Even if the first-year interest rate of a new issue was attractive in comparison, the bond-holder may prefer to hold on to the existing bond because the interest payment is due shortly and he would like to be able to use the money, or wait for even higher interest rates before switching. Therefore, the choice of whether to redeem existing Savings Bonds and apply for new issues with higher interest rates will be better left to the individual bond-holders than to have the Government automatically roll it over.

To reiterate, the design of the Savings Bonds is expected to offer a safe savings option for individuals while also allowing them the flexibility to redeem their bonds in any given month. It may not be an inflation-linked bond, as Mr Liang and Mr Tay have asked the Government to consider, but, in effect, the full-redemption features allow bond-holders to mitigate against risks of soaring inflation and higher interest rates.

On a related note, some people have also asked if Savings Bonds offer good returns, compared to existing savings and investment options.

Mr Tay will be pleased to know that the interest received on Savings Bonds will be tax-exempt.

The returns on Savings Bonds are pegged to the market yields of conventional Singapore Government Securities, commonly known as SGS. The full interest rate schedule for each bond will be announced by MAS when the application period opens each month. Over the past 10 years, the 10-year SGS yield has, generally, been between 2% and 3%. Compared to SGS, the Savings Bonds offer attractive returns, considering the additional benefits of capital-guarantee and flexible redemption. Mr Liang has characterised this as a

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"free lunch". There are very few "free lunches".

We expect that the interest rates paid by the Savings Bonds would be higher than that of shorter-term fixed deposits but lower than the longer-term CPF monies. Savings Bonds are thus meant to complement, and not replace, existing instruments, like fixed deposits, bonds and equities. Mr Yee also talked about corporate bonds. But I should add that the other investment options carry varying levels of risk which investors ought to familiarise themselves with before plunging in.

Mr Tay has also asked that investors be allowed to use their SRS monies to buy Savings Bonds. Others have pointed out that CPF monies cannot be used. The Government will consider the suggestion of allowing SRS or CPF monies to be used to buy Savings Bonds. It makes sense to start the Savings Bonds with cash purchases as it complements the CPF scheme. There are also ongoing reviews to provide CPF members more investment options. We will consider all these in totality.

To address Mr Liang and Mr Yee's query, the Government will allow Savings Bonds to be transferable to beneficiaries in the event of death of a bond-holder. Such transfers can be effected in full, without being constrained by the cap on individual holdings. However, a beneficiary will not be able to apply for new Savings Bonds if his total holdings exceed the cap, until maturity or redemption of the existing bonds brings him below the cap.

Mr Tay and Mr Yee have also noted the importance of communicating the details of the Savings Bonds programme to the public. To ensure that Singaporeans are aware of the features and application process of Savings Bonds, MAS will be conducting a public education campaign through the media and its industry partners. A dedicated website will also be set up for the public to obtain information on Savings Bonds and a public hotline to answer enquiries.

The Government intends to make Savings Bonds accessible to all Singaporeans and have linked up with the three local banks to widen the outreach. But I assure Mr Yee we are not only depending on the banks for the outreach. As you heard earlier, we will have our own website and our own public education campaign.

As to why there is a cap on individual holdings, it is precisely to allow as many individuals as possible to gain access to the Savings Bonds. Otherwise, they could be concentrated in the hands of a small number of savvy investors. Nonetheless, the Government can review the caps after a period of time when patterns of demand have had the opportunity to stabilise.

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In conclusion, the Savings Bonds are a new type of Singapore Government Securities designed to offer individuals a long-term, flexible savings option with safe returns. They will provide individuals with more options to save and invest to meet their long-term financial needs. The proposed Government Securities (Amendment) Bill will allow Savings Bonds to be issued as non-tradable securities to protect individuals from capital losses.

I thank Members once again for their support of the Bill. Mdm Speaker, I beg to move.

[(proc text) Question put, and agreed to. (proc text)]

[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]

[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mrs Josephine Teo]. (proc text)]

[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]

It has been a long session. So, I propose to take a break now. I suspend the Sitting and will take the Chair again at 4.30 pm.

Sitting accordingly suspended

at 4.12 pm until 4.30 pm.

Sitting resumed at 4.30 pm

[Mdm Speaker in the Chair]

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[(proc text) Order for Second Reading read. (proc text)]

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

Unmanned aircraft, also known as unmanned aerial vehicles (UAVs), or drones, have become affordable and accessible to the general public. Recreational flying of unmanned aircraft is fast gaining popularity.

Organisations, including Government agencies, are also increasingly tapping on the capabilities of unmanned aircraft for commercial purposes, such as for aerial advertising and event photography and filming, and for specialised services, such as search and rescue, as well as surveillance and inspection.

To develop a balanced and sustainable regulatory framework that encourages the safe and responsible use of unmanned aircraft by both public sector agencies and private companies, the Ministry of Transport (MOT) had set up a multi-agency Unmanned Aircraft Systems (UAS) Committee a few months ago. This UAS Committee has been engaging stakeholders to facilitate proof-of-concept trials and innovative use of unmanned aircraft by public sector agencies.

The Maritime and Port Authority of Singapore (MPA), for example, will soon have an extra pair of "eyes" to assess oil spills at sea, in the form of an unmanned aircraft which can be deployed from its patrol boats. The Home Team agencies are looking at unmanned aircraft usage to enhance their response during emergencies and incidents. Other uses of unmanned aircraft being explored include safety inspection of cranes at work sites and monitoring of vast areas of state land, waterbodies, pipelines and off-shore structures.

Unmanned aircraft can, however, pose public safety and security risks. Members may remember the case in which an unmanned aircraft crashed and injured a triathlete in Australia last year. Just last month, an unmanned aircraft with radioactive substance landed on the roof of Japanese Prime Minister Shinzo Abe's office. In the United States (US), flights of drones over a concert had sparked safety concerns. In Singapore too, there have been several episodes of unsafe use of unmanned aircraft, but, thankfully, there were no deaths, injuries or damage to property. But we might not always be so lucky.

Clear rules on the use of unmanned aircraft will enhance safe and responsible operation of the aircraft. It will allow us to facilitate innovative uses like the ones I mentioned earlier,

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while mitigating the risks to public safety and security. It is for this reason that the Air Navigation Act (Cap 6) or ANA, and the Public Order Act (Cap 257A) or POA, are being amended by way of the Unmanned Aircraft (Public Safety and Security) Bill 2015.

Let me highlight the key amendments in the Bill.

First, the amendments to ANA. The new section 2A will make a person who flies or operates an unmanned aircraft from outside Singapore liable for the new offences under sections 7, 7A, 7B and 7C of ANA, as if the person had been in Singapore when committing the offence. This is to cater to the scenario where an unmanned aircraft may be flown into Singapore from outside Singapore.

The Minister for Transport will publish in the Government Gazette a list of security-sensitive areas as protected areas under section 7. Examples of such locations are the Istana, Parliament House, Supreme Court, Jurong Island and military camps and bases. A new section 7A will prohibit unmanned aircraft flights over these protected areas. Section 7 will also prohibit the taking of photographs, from an unmanned aircraft, of these protected areas, unless a permit is obtained.

A new section 7B will absolutely prohibit an unmanned aircraft from carrying any arms, explosives, munitions of war, biochemical, nuclear substances, or hazardous substances. A new section 7C will prohibit the discharge of any substance from an unmanned aircraft without a permit.

A new section 29G will allow a safety inspector authorised by the Civil Aviation Authority of Singapore (CAAS), senior Police Officers or an Auxiliary Police Officer authorised by the Commissioner of Police, to order the operator of an unmanned aircraft to (a) end the flight; (b) land the unmanned aircraft; or (c) fly the unmanned aircraft in a specified manner, if the unmanned aircraft is being operated in a manner that poses a serious and imminent risk to the safety of the public. The enforcers are also given powers to assume control of an unmanned aircraft in order to end the flight of the aircraft or land it safely and detain it or any component of the unmanned aircraft system.

Sections 3 and 3A are expanded to allow CAAS to make laws on the operation of unmanned aircraft, including indoor operation of such aircraft, to ensure public safety. Section 4M of ANA is amended to provide greater clarity on the powers of CAAS' safety inspectors to require the attendance of witnesses and the process for taking of statements.

Let me now highlight the key amendments to the POA.

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Section 26 of the POA is amended to prohibit unmanned aircraft from entering special events venues, except where a permit has been obtained from the Singapore Police Force. A new section 32(2) will also make it an offence for an unmanned aircraft to be operated in a manner that disrupts or interferes with the conduct of an activity associated with the special event, whether in or outside the special event area. Examples of special event areas could include venues of major events where big crowds are expected, such as the Sports Hub or the Padang and their vicinity during the National Day Parade and the venues of the Southeast Asian Games (SEA Games). Police Officers and Auxiliary Police Officers can be authorised by the Commissioner of Police to exercise enforcement powers under the new section 32A, similar to those I have described earlier.

The maximum penalty for an offence of carrying dangerous substances using an unmanned aircraft is a fine not exceeding $100,000 or a jail term not exceeding five years, or both, while the penalty for an offence of discharging a substance from an unmanned aircraft without a permit is a fine not exceeding $20,000. The penalty for each of the other offences under the Bill is a fine not exceeding $20,000 or a jail term not exceeding 12 months, or both.

Mdm Speaker, unmanned aircraft can transform the way we do our jobs in many industries. It has the potential to increase productivity and efficiency and enhance the effectiveness of our services and operations. However, given Singapore's busy airspace and densely populated urban environment, unmanned aircraft operators need to ensure that they operate the unmanned aircraft safely and responsibly, exercising due care and concern for others.

In this regard, the proposed Bill provides a clear regulatory framework for unmanned aircraft operations, to safeguard public safety and security. The UAS Committee will continue its work to improve and refine this framework in order to strike an even better balance across safety, security and other concerns while facilitating unmanned aircraft operations. Mdm Speaker, I beg to move.

[(proc text) Question proposed. (proc text)]

(In Mandarin) [Please refer to Vernacular Speech.] Mdm Speaker, drones are getting more popular. According to the US Consumer Electronics Association, the global market for consumer drones will approach US$130 million in 2015, increasing by more than 50% from 2014 and, by 2018, the figure is expected to reach US$1

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billion.

With technology improvements, drones are getting cheaper, too. A popular China-made DJI drone, for example, costs as low as $1,200 and has very good functions. Many even consider it worthy for commercial use.

Drones can help to solve many problems and create new opportunities. However, drones could also cause problems if the drone operators harbour bad intentions. On 29 April 2015, Katsu, a popular graffiti artist, used a drone to discharge red paint to vandalise one of the largest outdoor billboards in New York City. Section 7C of the Bill will prohibit the discharge of any substance from an unmanned aircraft.

On 9 May 2015, a United Kingdom newspaper reported that an American tourist was trying to fly a drone close to Windsor Castle to take photographs. Fortunately, he was caught in time. Section 7A of the Bill provides MOT the authority to declare a list of security-sensitive areas as protected areas and prohibit drones from flying over them or take aerial photographs of the protected areas without a permit.

These two separate incidents show the importance and timeliness of the Bill.

(In English): Mdm Speaker, in my Chinese speech earlier, I had used two examples to illustrate how drones could be used to vandalise public property and also intrude into security sensitive areas. Earlier this year, there was also a drone that landed quite unexpectedly in the White House in the US. The incident had caused a huge public alarm. The experiences that I have mentioned above show that it is timely to have an Unmanned Aircraft (Public Safety and Security) Bill in place. Even though I support the Bill, I have three areas of clarifications and one suggestion for the Minister. For the purpose of this discussion, I will use the term "unmanned aircraft" and "drone" interchangeably.

I understand that under this Bill, a permit may be required for a drone to be used for specialised services such as:

flying the drone over any crowd; or

suspending, carrying or attaching any item to the drone unless it is manufactured to hold the item.

We are celebrating SG50 this year and there are many SG50 events besides the National Day Parade, which is classified earlier on by the Minister as a special event similar to the SEA Games. Many drone fanatics would like to use their drones to join in the celebrations. Will

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the authorities require an amateur drone operator to apply for a permit from CAAS to fly the drone over SG50 events or other private events for the purpose of taking aerial photographs and videos? Can a drone fly with a Singapore flag during such events? What is the definition of "crowd" as stated in the advisory for the Safe and Responsible Operations of Unmanned Aircraft? This is my first set of clarifications.

Under clause 13 of the Bill, an authorised person, including a Police Officer of or above the rank of Sergeant, has the power to use necessary force to end the flight of an unmanned aircraft in the fastest and safest practicable way. Does it mean that the Police Officer is entitled to use firearms to open fire at an illegal drone or is the authority thinking of using another bigger drone to destroy the illegal drone? What are the examples of necessary force that the authorities have in mind to "end the flight of the unmanned aircraft in the fastest and safest practicable way"? This is my second set of clarifications.

Before I proceed with my third set of clarifications, Mdm Speaker, allow me to declare my interest as I am the Senior Vice President of SBS Transit. I understand that MOT is drawing up a list of security sensitive locations which include airports, power stations, army camps, Police establishments, headquarters of various Government Ministries, as well as Parliament House, as mentioned by the Minister earlier. Does MOT consider Mass Rapid Transit (MRT) tracks and MRT depots as part of the sensitive locations? Were there any previous instances where drones flew over and crashed onto the MRT tracks? We certainly do not want drone operators to take aerial photographs of MRT depots to aid potential intruders in vandalising the trains. We have just heard the Second Minister for Home Affairs saying earlier in the House that the Government is taking a very serious stand against vandalism.

As mentioned in the beginning of my speech, the availability of affordable high-tech drones opens up many possibilities for commercial usage. In Singapore, the Timbre Group is considering using Infinium Robotics' drones to deliver up to two kilogrammes of food and drinks from its group of restaurants. It is not only novel but a practical way to solve their manpower shortage issue. I understand that all drones operating for commercial purposes need to apply for a permit even under the new Bill. At the same time, I understand that about 30% of the 70 applications for a permit to fly a drone in January 2015 were all rejected.

While we want to regulate the usage of commercial drones, we should not over-regulate so much so that the industry will find that it really kills the commercial initiative. For example, Amazon is battling with US Federal Aviation Administration, or FAA, for its reluctance to approve beyond visual line of sight operations so that Amazon can continue its trial to deliver lightweight goods to its customers using drones. Currently, in the US, there is a big debate whether the FAA is over-regulating the use of drones for commercial purpose. Meanwhile, Alibaba is pushing ahead with its own trial to deliver ginger tea packets to its customers in Beijing, Shanghai and Guangzhou. If this trial is successful, Alibaba could

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overtake Amazon in this respect.

If a popular online store in Singapore, such as Qoo10, would like to apply for a permit to conduct a trial to deliver items of, say, less than one kilogramme in weight to its customers using drones, will the authorities approve such a trial?

The commercial usage of drones is like a money plant. Money plants need very little sunlight and water to thrive. However, it still needs some light support for the plant to blossom. In the same way, innovative uses of drones will thrive as long the regulators do not unnecessarily block the initiative, akin to blocking the sunlight. At the same time, the innovative use of drones needs some support from the Government for the industry to bloom, giving Singapore an edge over other countries. With this, I support the Bill.

Mdm Speaker, the increasing popularity of unmanned aircraft (UA) necessitates an update of our regulatory and permit framework to facilitate their usage while ensuring safety and security.

This Act amends the ANA and POA. New sections 29G of ANA and 32A of the POA provide for authorised personnel to take action to counteract security and safety breaches. They can direct the fastest and most practicable way of controlling or ending an UA's flight path, even by force, if necessary.

However, it is not very clear to me how far our enforcers are allowed to go to end the flight paths of rogue UAs. Would the authorities be empowered to shoot them down if the operators refuse to land them, or if they are beyond control and likely to cause harm and injuries on the ground? I would appreciate if the Minister could share more details in this area.

What worries me about this Bill is the lack of measures to enable the authorities to carry out preventive checks to minimise chances of UAs carrying prohibited items, especially explosives, from taking off; and in the event rogue UAs are recovered, there may be very little evidence on them to assist with the identification of owners and operators.

I suggest that we put in place checks and restrictions on all UAs, locally-made or imported, and impose licensing and certification requirements so that the authorities will have a complete database of UAs and their owners, somewhat similar to the database we have for SIM cards for mobile phones. Even the UAs owned by hobbyists who fly the UAs for recreation or private use should be included. This way, operators would be more conscious

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of responsible usage and it would be more feasible for the authorities to track down operators should something go wrong.

Next, the penalty for carrying dangerous materials, such as weapons or biochemicals, is a fine of up to $100,000, jail for up to five years, or both. I think that this punishment is too light for anyone who carries such dangerous materials which can cause injuries and fatalities on a potentially massive scale. I urge the Ministry to re-examine this.

With more and more UAs fitted with cameras, it would be inevitable that the privacy of all in the flight paths of UAs will be compromised. How would the authority resolve the problem of such intrusions and help protect residents' privacy? Taking UA operators to Court for privacy invasion can be tedious and expensive for most Singaporeans and residents. How can the Government help victims take action against errant operators in an expeditious and affordable way?

Finally, may I request the Ministry to consider prohibiting the flying of UAs in all Housing and Development Board (HDB) estates, especially between the HDB flats, as they would certainly intrude upon the privacy of the flat owners, unless with permits and copies of the video recorder are subject to censorship. With that, I support the Bill.

Mdm Speaker, unmanned aircraft, also known as UAV, remotely piloted aircraft (RPA) or "drones", are aircraft which can be operated without a human pilot on board. This Bill introduces a new regulatory framework to address security and safety concerns posed by unmanned aircraft flying in Singapore's airspace.

Until recently, drones were better known for their ability to spy on enemy movements in the battlefield or deliver precision strikes on terrorists in troubled regions. However, in the past few years, drones have been more commonly mentioned for their commercial and civilian, rather than military, uses.

There is the "Octocopter", which online retailer Amazon is planning to use to deliver packages in as little as half an hour after the purchase. Drones are also being used for aerial photography, patrolling of secure areas, inspecting ships and oil spills, and search and rescue operations, to name just a few.

In introducing this new regulatory framework, the Government should take care to avoid hindering commercial developments by placing too heavy a regulatory burden on the

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drone market. This is so that our companies and our local entrepreneurs can benefit from, and contribute to, some of the promising innovations in this exciting new space.

The Bill empowers CAAS, with the approval of the Minister for Transport, to make orders and regulations with regard to unmanned aircraft. The detailed regulations have not been spelt out in this Bill, although some have been mentioned in media reports and the Minister's speech.

I would like to clarify if the following regulations are on the cards.

First, will the regulations specify that drones must keep a safe distance from persons, vehicles, buildings or structures as well as from congested areas or large groups of people, such as sporting events or concerts?

Second, on requiring "geo-fencing". Flying drones within five kilometres of an aerodrome is already prohibited under the Air Navigation Order. However, there is a risk that drone operators may unintentionally fly too close to an aerodrome or military installation. This will pose not just a security risk, but also a safety threat to aircraft taking off and landing. As such, has CAAS considered requiring drones above a certain weight or size to be equipped with geo-fencing capabilities? Using geo-fencing, the drone can be programmed with the coordinates of aerodromes and security-sensitive areas in Singapore. If it tries to enter these areas, it will be forced to turn around or land. I understand that many commercial drones already come equipped with geo-fencing capabilities, so it should not pose too much of a regulatory burden for these drone operators.

Third, CAAS regulations currently prohibit a drone from being flown beyond the normal unaided "line of sight" of the person operating it. However, there are currently beyond-visual-line-of-sight (BVLOS) technologies being developed, which will enable a drone operator to make course changes to avoid obstacles, including other aircraft, using on-board cameras. It was recently reported that the US Federal Aviation Administration is working with private companies to test commercial drones that can fly beyond an operator's line of sight. This will open up the possibility for more sophisticated drone operations, such as package delivery. While it is still early days for this technology, I hope that CAAS remains open to issuing permits, on a case-by-case basis, to companies to test-bed such technologies in Singapore so that we maintain an edge over our overseas competitors.

Fourth, it was reported that all commercial drone operators will need to apply for a permit. Can the Minister explain why this requirement is being imposed on all commercial operators? Is the risk posed by commercial operators higher than that of, say, hobbyists? Would it not be fairer to require permits only for drones above a certain weight or size,

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rather than placing a permit requirement on all commercial operators?

Fifth, if commercial operators are required to apply for a permit, then it is important that the assessment criteria for permit approvals be made transparent, in terms of the specifications of the drones, the types of commercial uses that will be allowed and whether there would be any requirements for operators, in terms of training and qualifications. If this law is to be effected on 1 June 2015, which is just over two weeks from now, then sufficient time must be given to operators to obtain the permits without interrupting operations.

Sixth, CAAS says that it will serve as a one-stop centre for all drone permit applications. This is a welcome move. I hope this will help reduce red tape and the time taken for permit approvals. Can the Minister share what will be the expected typical waiting time for permit approval, so that commercial operators can better plan their schedules and operations?

I have some security concerns about the risk of drones being used for terrorist activities. While this Bill will probably be effective in preventing law-abiding drone operators from unintentionally causing harm to persons and property, it is unlikely to stop a determined terrorist from using a drone to fly explosives, chemical or biological agents into key installations or large crowds, causing mayhem, fatalities and serious injuries.

It is important that our security agencies develop plans for detecting, intercepting and taking down rogue drones. These include acquiring systems to "detect and defeat" drones. I note that clauses 13 and 17 give the authorities the power to direct a drone operator to change course or assume control of the drone, by force if necessary, to end the flight of the drone in the fastest and safest practicable way.

However, detecting and defeating rogue drones is not a straightforward task. Most drones are small, move slowly and fly low, which makes it difficult for radar to detect them. To "defeat" a detected drone by shooting it down or jamming its control signals could risk injuring innocent bystanders when it plunges to the ground, particularly if it contains a hazardous payload.

According to The Economist, there are currently systems that can hijack a drone's navigation and control systems and fly it to a desired location, or to use another drone to catch the drone in a net. In addition, there are technologies available to track the control signals of a rogue drone back to its human operator and intercept the operator. Has the Government already acquired such systems to deal with rogue drones?

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