Hansard, Monday, 19 November 2018

1 Miss Cheryl Chan Wei Ling asked the Minister for the Environment and Water Resources (a) what are the factors that the Ministry considers before deciding to outsource the hawker centre management from NEA to private companies; and (b) whether the Ministry has oversight of the general contract framework or pricing models that the private management companies impose on their tenants.

2 Miss Cheryl Chan Wei Ling asked the Minister for the Environment and Water Resources (a) what are the different types of new hawker centre models available today; (b) of all the current hawker centres, how many of them are under these new models of management; and (c) whether there is a timeline for measuring the effectiveness of each model when the new hawker centre models are being tested.

3 Mr Gan Thiam Poh asked the Minister for the Environment and Water Resources (a) what is the total number of vacant stalls at NEA-run hawker centres and markets as at 30 September 2018; and (b) what has been the take-up rate of vacant stalls since NEA removed the floor price.

4 Er Dr Lee Bee Wah asked the Minister for the Environment and Water Resources (a) how many hawkers have taken part in the Incubation Stall Programme; (b) how many will be continuing beyond the incubation period; and (c) for those who will not continue, what are the reasons and how will the Ministry address them.

5 Er Dr Lee Bee Wah asked the Minister for the Environment and Water Resources (a) what challenges do hawkers face under the social enterprise hawker centres initiative; (b) what kind of pricing model should hawkers and patrons expect under this initiative; and (c) how is the Ministry addressing the unhappiness resulting from this initiative.

6 Mr Liang Eng Hwa asked the Minister for the Environment and Water Resources (a) whether the total cost of running a hawker stall under the new social enterprise-run hawker centres model has been significantly higher than that of the NEA-run model; (b) whether the new model has helped serve the policy intent of providing affordable food and sustaining hawker culinary skills and trade; and (c) whether the contractual terms and requirements imposed by the operators of the new model on the hawkers are reasonable and fair.

7 Dr Lim Wee Kiak asked the Minister for the Environment and Water Resources (a) whether the Ministry can stop further outsourcing of hawker centres to private operators; (b) whether the Ministry conducts an oversight of the contract terms between the management and tenants of outsourced hawker centres; and (c) what is the Ministry doing to resolve the many issues arising from its decision to outsource hawker centres.

8 Mr Zainal Sapari asked the Minister for the Environment and Water Resources (a) what are the key success factors that can be attributed to NEA-managed hawker centres in bringing affordable and good food to the public; and (b) what are the challenges in replicating the successful NEA-managed hawker centres to new hawker centres operated by social enterprises.

9 Mr Gan Thiam Poh asked the Minister for the Environment and Water Resources (a) what are the cost components of running the existing hawker centres and markets; (b) whether there is a subsidy or grant given to each hawker or market stall and, if so, what is the subsidy; and (c) whether the same subsidy or grant is extended to social enterprise operators.

10 Mr Gan Thiam Poh asked the Minister for the Environment and Water Resources (a) what has been the success rate of tray returns since the programme was launched; and (b) whether there is a need to redesign the tray return collection points through enhancement of the washing area for patrons to return direct to the washing area-cum-collection point for better efficiency and reduce bird-related hygiene issues.

11 Mr Melvin Yong Yik Chye asked the Minister for the Environment and Water Resources (a) how many hawker stalls are paying a rental of $10,000 or more per month; (b) what is the current highest rental that a hawker stall is paying; and (c) whether the Ministry will consider implementing a cap on the rental to better manage food prices.

12 Mr Ong Teng Koon asked the Minister for the Environment and Water Resources whether hawker centre stall rental rates can be delinked from private market rental rates, including privately-owned HDB coffee shops, and free market bidding rates.

13 Mr Darryl David asked the Minister for the Environment and Water Resources (a) what measures are in place for the Ministry to take action against private operators of hawker centres who do not abide by the terms of the operating contract; and (b) what action can be taken against private operators of hawker centres whose actions or lack thereof lead to reputational damage for the Ministry, other Government agencies, hawkers and other community stakeholders.

14 Prof Lim Sun Sun asked the Minister for the Environment and Water Resources whether the Ministry has considered working with NHB's Our Hawker Culture travelling exhibition to better grasp public opinion and tap new ideas on what Singaporeans expect of our hawker centres beyond providing affordable food.

15 Prof Lim Sun Sun asked the Minister for the Environment and Water Resources where food supply is required at complexes that are open 24 hours, whether the Ministry has considered more strategic use of vending machines that provide hot food in place of mandating that hawker stalls remain open.

16 Mr Dennis Tan Lip Fong asked the Minister for the Environment and Water Resources (a) whether rent and all ancillary charges payable by hawkers in hawker centres operated by not-for-profit social enterprises, such as dishwashing charges, are lower than those in NEA-managed hawker centres; and (b) if not, whether the Government intends to take any corrective action to reduce any additional business costs for the hawkers accordingly.

17 Assoc Prof Walter Theseira asked the Minister for the Environment and Water Resources (a) what is the relative cost structure of hawker stalls under NEA management, social enterprise management, and for-profit coffee shops respectively; (b) what are the nature and extent of implicit subsidies provided in NEA-managed hawker centres; and (c) whether the Ministry has plans for subsidising the operating costs of hawkers when hawkers experience difficulties in providing affordable food while earning a reasonable income.

18 Miss Cheng Li Hui asked the Minister for the Environment and Water Resources (a) how does NEA intend to help mitigate the cost increase in rental for the social enterprise-run hawker centres over time; and (b) whether NEA has any plans to run the hawker centres currently operated by social enterprises.

19 Miss Cheng Li Hui asked the Minister for the Environment and Water Resources (a) how long will NEA take to complete the stock-take of the social enterprise model of hawker centres; (b) whether the findings will be published for public consultation; and (c) whether the ongoing debate on social enterprise-run hawker centres will affect Singapore's bid for hawker culture to be listed under the UNESCO Representative List of the Intangible Cultural Heritage of Humanity.

Mr Deputy Speaker, I thank the Members for raising many thoughtful questions.

Minister, do you want to cover the rest of the questions.

Yes, I will cover Question Nos 1 to 8 and Senior Minister of State Amy Khor will cover the rest.

Certainly.

Thank you. I thank the 13 Members for raising many thoughtful questions on the socially-conscious enterprise hawker centres (SEHCs). I will speak on why we embarked on the Socially-conscious Enterprise Hawker Centre (SEHC) model, how we select operators, and share our views on how the SEHCs are performing. Senior Minister of State Amy Khor will elaborate further on our efforts to refine the SEHC model and better support our hawkers.

Hawker centres are an integral part of Singapore. They are our community dining rooms – well-loved by Singaporeans from all walks of life. They serve three key social objectives by providing: one, affordable food in a hygienic environment; two, a decent living for our local hawkers; and three, vibrant social spaces to bond our communities. These are good objectives to achieve individually; but together, they compete against one another. So, tradeoffs need to be made for an optimal outcome.

Let me start by recalling that the Government restarted building hawker centres in 2011, after a hiatus of almost 30 years. We were concerned about the lack of affordable dining-out options for Singaporeans at a time when there was a boom in coffee shops and food courts. Natural market forces were pushing up rents at those private food and beverage (F&B) outlets and, consequently, food prices. The public was concerned about the rising cost of living. In response to widespread appeals by Singaporeans, we resumed building hawker centres to serve as a ballast to stabilise cooked food prices against the emerging dominance of coffee shops and food courts.

The Government has committed to building 20 new hawker centres by 2027 in new estates or existing ones that are relatively underserved. These will provide about 800 new hawker stalls at significant investments. Each hawker centre costs $15 million to build. The Government absorbs the building costs and subsidises their ongoing maintenance but does not recover such costs from stall rental.

We recognise, however, that just by building new hawker centres, we cannot automatically expect them to be viable and sustainable. In the early 1970s, the Government started building hawker centres to resettle street hawkers, so as to improve hygiene and food safety standards. Over time, they became our signature community dining rooms. To this day, they enable us to preserve the important culture of eating out together, regardless of our status, rich or poor, young and old.

Over time, too, a good number of these first- and second-generation hawkers, who receive cheap subsidised rentals, only work short hours. Residents, in turn, feedback that some existing centres do not fully cater to their dining needs. I was at Shunfu Mart Food Centre during a recent Ministerial Community Visit in Bishan East-Thomson Constituency. The hawkers only open for breakfast and lunch; some even just for breakfast. Residents do not have access to affordable food in the evening. This situation reflects a need for the careful balancing act to look after the interests of both hawkers and the community. Ultimately, hawker centres exist to serve Singaporeans. But we also have to be fair to hawkers and safeguard their well-being.

Our social and demographic landscape has changed significantly. Today, the median age of our hawkers is about 60. We have about 6,000 cooked food stalls at our 114 hawker centres. More than one third of our hawkers and their assistants will retire in the next 10 years. Being a hawker is physically demanding. Many successful hawkers tell us that they hope their children will not follow in their footsteps. The challenges of the trade deter many young Singaporeans. We have to transform and find ways to make the hawker trade sustainable, or we may end up with hawker centres without hawkers.

The demographic profiles and needs of residents have also evolved, particularly in newer estates. Patrons are more well-travelled and demand fresh concepts and wider food variety. Hawker centres have to compete with coffee shops, food courts and other food outlets in the community. Even the traditional model of dine-in meals has been disrupted by central kitchens and food delivery services. We must help our hawkers meet these challenges, just like how we try to help our taxi drivers face the wave of challenges from disruptive competition like Uber and Grab.

To adapt to changing needs and circumstances, it is critical to find new operating models to sustain the hawker trade. This is similar to the role which the National Trades Union Congress (NTUC) Fairprice has played in the supermarket landscape. Over the years, NTUC Fairprice has been innovating and moderating prices of essential groceries, which has catalysed the transformation of the mom-and-pop grocery shops. Over time, as customer profiles change, NTUC Fairprice continues to meet the needs of a wide spectrum of customers, by providing diverse product lines from affordable house brand options to premium brands. Even NTUC Fairprice would not have been sustainable if they only provided affordable alternatives without the attraction of choice for their customers.

This is why we are trialling the SEHC model for our new hawker centres. We have started at seven new hawker centres, out of more than 100 managed by the National Environment Agency (NEA). These SEHC operators bring new ideas and inject innovation that hawkers individually or the Government cannot. We are giving an opportunity to those with expertise and networks in the F&B industry to apply themselves to socially oriented purposes. For example, they are able to curate food stalls for quality and variety. They are also able to bring in famous food recipes and are better placed to run hawker incubation programmes to help sustain the hawker trade.

They also innovate to improve footfall and enhance vibrancy of the centres through better marketing and place-making programmes, and not just leave it to chance. As the single operator of each hawker centre, with F&B and management competencies, these SEHC operators can help our hawkers weather the competition from other F&B alternatives and adapt to technological disruptions better than the hawkers can individually. In time to come, the better SEHCs will develop capabilities to support and sustain the hawker trade that we will appreciate.

To ensure that we select the right operators who do not profiteer, NEA has put in place safeguards through the tender and evaluation processes. First, NEA favours operators with lower overall charges to stallholders. Operators are required to propose rentals and operating costs upfront and cannot change these over the term of the tenancy. Second, operators must be transparent about costs. All new charges, including optional charges for value-added services, must be approved by NEA. Third, a large part of the hawkers’ operating costs, like the Service and Conservancy Charges (S&CC) and table cleaning fees, are “pass-through” charges, which the operators do not benefit from. As a reality check, we compare some of these costs with the alternatives like hiring additional hawker assistants, or the consequences of cheap sourcing low-quality workers. Fourth, operators are required to reinvest at least 50% of any operating surplus into social benefits for the hawker centres and stallholders.

I am heartened by the recent public discussion on how existing NEA centres are run better than the SEHCs. It is testimony that existing hawker centres under NEA management have done well over the years to meet the needs of their communities and the hawkers. But it is not enough to keep doing things the same way. This is why we have to continue with the SEHC model.

Several Members asked what makes a successful hawker centre. I believe most of us have patronised our favourite stalls at popular hawker centres, such as at Tiong Bahru or Adam Road. Many such existing centres are well-established in their communities. They have anchor hawkers who draw customers from all over the island. The new hawker centres do not enjoy this advantage and need time to build up a clientele. Location and connectivity are important factors. New hawker centres at Kampung Admiralty and Our Tampines Hub (OTH), situated at transport nodes and co-located with other public services or amenities, have enjoyed good business. Higher business volume will help stallholders cope with costs.

On the whole, SEHCs have achieved good outcomes despite the short time they have started operations. Foremost, food prices at SEHCs are affordable and comparable to existing centres. These are generally lower than prices at surrounding coffee shops and food courts. We cannot force hawkers to sell at cheap prices for all dishes at each stall. Instead, the operators have made available at least one affordable meal option at $3 and below for each stall and allowed hawkers to determine prices for other dishes. This means that prices are not kept artificially low. Instead, operators work with hawkers to offer a range of food offerings at different price points, so that there are both attractive options that residents are willing to pay for and, at the same time, affordable options when residents want that. Some hawkers have also chosen to price their dishes low to attract more customers. For example, "Old Times" at the Kampung Admiralty Hawker Centre prices all dishes below $3. Indeed, at each SEHC, there are close to 40 affordable options of various kinds of meals from 40 different stalls.

Secondly, SEHC operators have curated food stalls for quality and variety. They have tapped on their networks of hawkers and have the expertise to conduct food tasting when letting out stalls. They have also introduced interesting food options, such as prawn paste chicken rice and halal zi char, and new dining concepts. This ensures a good variety of food options, which is not always a given in existing hawker centres. Even in popular hawker centres like Tekka, we can find rows of stalls offering similar food because NEA is required to award one vacant stall at a time based on tendered rentals to the highest bidder. NEA does not have a mechanism to curate an attractive collection of food options at each hawker centre, like in the case of the SEHC model. Such an allocation system run by NEA would be complex to execute and be subject to potential audit issues.

SEHCs are establishing themselves within their communities and serving the residents well. Ci Yuan Hawker Centre recently passed its three-year mark. The hawkers are doing well and 97% of them chose to renew their contracts in July this year. At Bukit Panjang Hawker Centre, the renewal rate is similarly high at 96%. SEHCs at Kampung Admiralty and OTH are also doing well with hardly any vacant stalls and a long waiting list of potential hawkers. This is similar to NEA-managed hawker centres, where only 3% of cooked food stalls are vacant.

SEHC operators have also kept their centres open during breakfast, lunch and dinner – a major request made by the public. In contrast, some existing hawker centres focus on only one or two main meals a day, and some hawkers only work three to four days a week. To ensure vibrancy, SEHC operators have also introduced creative initiatives to increase footfall, such as complimentary parking, lucky draw programmes and shuttle bus services for office workers.

The SEHCs are leading a new model of clean and productive hawker centres, applying the best practices they have learnt in the private sector to overcome the constraints of labour shortage. All the SEHCs come with productivity initiatives, such as automated tray return systems (ATRS) and centralised dishwashing (CDW). Providing trained and properly supervised cleaners and a more hygienic environment have increased table turnover rates, benefiting both patrons and hawkers. The average tray return rates at SEHCs are much higher than those at our existing hawker centres because of the operators' efforts in implementing the ATRS. It makes the jobs of our cleaners easier and alleviates manpower shortages that our hawkers face in looking for workers to wash dishes. During my walkabout at Shunfu Mart Food Centre, I had noticed an economy bee hoon and nasi lemak stall which had a faded sign advertising to hire a stall assistant. The hawker shared that her children were not interested in helping out at the stall and she had been unable to hire an assistant despite advertising for a long time.

SEHCs have also managed to attract new entrants to sustain the hawker trade. The median age of hawkers at the seven SEHCs is 43, significantly lower than the median 60 at our existing centres. This is an encouraging sign and can be attributed to various initiatives introduced by SEHC operators, for example, Timbre's Incubator Programme and OTMH's Train and Place Entrepreneurship Scheme nurture new hawkers. Collectively, the five SEHC operators have trained a total of 38 aspiring hawkers since they started operations. These efforts complement NEA's ongoing incubation stall programme (ISP), which has supported 12 aspiring hawkers to date. Eight of them are still on the programme, while the rest had decided that they were either not suitable for the hawker trade or withdrew due to personal reasons. In addition, the operators have introduced productivity measures, such as centralised dishwashing, which allow hawkers to focus on their cooking and reduce the amount of menial tasks they need to do. Taken together, these initiatives reduce the physical burden of being a hawker and can go a long way to help sustain our hawker trade.

Nonetheless, the SEHCs will take time to establish themselves. Ci Yuan Hawker Centre, the first SEHC, only started operating three years ago, with the latest at Pasir Ris opening in January. Hawkers at these new centres need time to build up a clientele. Overall, the average monthly stall vacancy at SEHCs, at about 10%, is not exceptionally high and is not a bad result, considering that most stalls are new. Many of the hawkers are also new to the trade and need time to experiment with their recipes and decide if this is the career for them. The centres also need time to build up footfall.

The market mechanism is working, and the Government should not intervene unnecessarily in mandating low or no rental, which could otherwise affect fair competition. Hawkers are entrepreneurs after all. We want to reward successful hawkers to sustain the trade and preserve our beloved hawker heritage. It is natural to have some level of churn as better hawkers replace those who are less suited for the trade. Market forces would lead to a fair distribution of hawker stalls, which ultimately benefits residents. It is inappropriate for the Government to subsidise a hawker on the basis that business is poor. This would be unfair to a better performing hawker who thrives on healthy competition. It would also be unfair to other private sector food shop operators located in close vicinity to the centres. The model must, therefore, ensure that rentals and costs are transparent and fair to hawkers, but cannot subsidise hawkers to the extent that it distorts the workings of the market.

In summary, despite implementation challenges, the SEHC model is generally sound. Food prices are kept affordable with a good variety of high-quality options, and the majority of hawkers are doing well at the SEHCs. We should not undo these achievements. As with any trials and experiments, we cannot always get it right the first time. We have heard the feedback and will adjust the model to better serve Singaporeans. We will continue with the SEHC model and improve it so as to serve patrons well and look after the well-being of our hawkers.

I ask Members to give the model time to adapt, adjust and optimise the outcomes we seek to achieve: first, the availability of affordable food options that do not deny respectable earnings for our hawkers and, at the same time, moderate the free market F&B alternatives; second, a decent living for our local hawkers that is sustainable even while providing affordable options; and third, to preserve our hawker centres, where we are proud of our unique vibrant social spaces as community dining rooms where everyone goes to, where affordable food is also good food.

Senior Minister of State Amy Khor will take the rest of the questions and then we will take the supplementary questions. Thank you, Deputy Speaker.

Senior Minister of State Amy Khor. Please let us know which questions you are taking.

Mr Deputy Speaker, with your permission, may I take Question Nos 9 to 19, please?

Yes, please.

Thank you. Let me first thank Members for their questions and concerns for our hawker centres. In fact, I would like to take this opportunity to thank members of the public for the many views, discussions and suggestions that they have put forward. We appreciate such views and feedback to help us to improve to better serve our hawkers and Singaporeans.

I will speak on our efforts to better support our hawkers and look after their well-being.

As a regulator, NEA must strike a balance between serving the public well, and ensuring the well-being of hawkers, while working to achieve the social objectives of our hawker centres. Residents should have access to affordable food in a clean setting for all three meals. At the same time, hawkers must be able to make a decent living, under fair tenancy terms and conditions.

As with any trial, it is difficult to get the SEHC model right from the start, especially since we have not built new hawker centres for almost 30 years. So, we set some key parameters. Let the market work; and when we get feedback, or issues are raised, we will move to address them swiftly and decisively, as we have done in the past month or so. We are not done with the stock-take of the model and will continue to refine it to better serve Singaporeans. I will outline three areas of improvements which we have made and will continue to focus on.

First, we will better support stallholders to manage costs. My Ministry, together with the Ministry of Trade and Industry (MTI), conducted a study on the drivers of hawker centre food prices in 2014. We found that the costs of raw materials and manpower made up the bulk of the hawkers' costs at 76%, not stall rentals, which only comprised 12%. It is also shown through studies by the Institute of Policy Studies (IPS) that hawkers generally price food according to what the market can bear.

This is influenced by competition in the vicinity and the demographic profile of customers. Hence, rentals do not directly affect food prices. Nonetheless, for both our existing hawker centres and our new SEHCs or new centres, we have put in place measures to ensure that rentals are fair and not speculative. For existing centres, we have removed the reserve rent and disallowed subletting and assignment. For new centres, we have, in our tender evaluation, favoured tenderers who offer lower total rental and operating costs, and prohibit any increases in rentals or operating costs for the duration of the tenancy, as one of our priorities is to safeguard the interests of our hawkers.

The median rental of stalls in SEHCs is about $2,000 per month, not $4,000 per month as some media reports have claimed. The median rental of stalls in comparable existing hawker centres is $1,700 per month, which is comparable to those of the new centres after accounting for the larger stall size, better-designed stalls and amenities at the new centres and, in some cases, the co-location of the new centres with residential properties as well as other amenities.

Stall sizes at our new centres of between 10 square metres (sqm) and 21 sqm are much larger than existing centres, which are between five sqm and 13 sqm. Additionally, the actual stall rentals at our new centres range from $750 to $3,700 a month. This is in line with rentals of non-subsidised stalls at our comparable existing centres, which range from $640 to $3,900 a month.

Our hawker centre rentals, specifically those at SEHCs, are not linked to the rentals of surrounding coffee shops and food courts. In fact, they are nowhere near the rentals at these private F&B outlets, which can range from $4,000 to $13,000 a month, before other operating costs. We will continue to monitor and ensure that stall rentals in our new centres are reasonable to enable hawkers to make a decent living.

As for existing hawker centres, no stallholders are paying astronomical rentals. The recent $10,000 bid was an outlier, and the bidder did not even commence operations. Besides rentals, the operating costs at the SEHCs and existing centres are comparable, too. For example, S&CC at the new centres are between $110 and $350 a month, within the range of $130 to $450 a month at our existing centres. Similarly, table-cleaning fees at the SEHCs are between $300 and $550 a month, again, within the range of $200 to $830 a month at our existing centres. Operating costs payable by hawkers at existing centres also frequently do not take into account the costs for dishwashing. At the majority of our existing centres, without centralised dishwashing (CDW), stallholders may have to hire dishwashers which could cost up to $1,500 a month, which is much higher than the average CDW charges. Moreover, these hawkers often have difficulties hiring and retaining such hawker assistants, as my Minister has said earlier, too.

Nonetheless, to further help SEHC stallholders manage costs, we announced last week that we will extend the PHC grants to these hawkers for two years, effective from 1 January next year.

With the grant extension, stallholders at our new centres will enjoy 50% reduction in their CDW costs for the first year and 30% for the second year. Currently, these grants are only available to hawkers at our existing centres under the PHC format. However, after a few years of operations with the new centres, we recognise that hawkers at the new centres may also need some support in transition as they need time to build up their clientele. These productivity solutions, such as CDW and automated tray return systems (ATRS), are necessary to alleviate our tight manpower situation and help hawkers solve problems like staff shortage. The average tray return rates of our SEHCs are far higher, at about 58%, than those at our existing hawker centres which are at about 25%. But we can do better. First and foremost, patrons should form the habit of returning their trays with the crockery after eating.

A high tray return rate will directly benefit both patrons as well as hawkers as it will lead to a faster turnover of tables, keep the birds away and lead to a cleaner environment that helps attract patrons.

It will also ease the workload of our cleaners so that the cleaning companies do not have to keep increasing the number of cleaners, which will eventually lead to higher cleaning costs for the hawkers. Even if they want to increase the number of cleaners, they consistently face manpower shortage and issues with hiring.

Greater public education and close partnership between operators, hawkers and patrons are key. Everyone must play their part towards ensuring a clean environment in our hawker centres to benefit both patrons and hawkers. In fact, most hawkers have welcomed the productivity initiatives implemented at our new hawker centres. Toh Swee Han, a 39-year-old hawker operating the "Mang Cheng Xiang Curry Rice" stall at OTH Hawker Centre, said that he was satisfied with CDW as it helped him reduce his cleaning costs significantly. He highlighted that CDW fees at OTH added up to only $700, before the productivity subsidy, while it would cost him about $3,000 to hire two assistants to cover the same workload.

CDW also saves stallholders from paying additional water charges or managing an inventory of crockery and cutlery that has to be replaced due to wear and tear or loss. Hygiene is better as they do not have to carry out dishwashing within the stall area. We hope that this will alleviate the workload of our hawkers, especially the older hawkers, and make the trade more attractive to our younger hawkers by reducing menial work.

Following a Call-for-Collaboration (CFC) led by Enterprise Singapore (ESG), on behalf of NEA, HDB and JTC, NEA is partnering Network for Electronic Transfers (NETS) to provide interoperable e-payment solutions to our hawkers. Stallholders in SEHCs can take up the CFC e-payment solution for three years without paying transaction costs or terminal rental. This will provide an additional option to SEHC operators to encourage stallholders to opt for e-payment.

The above subsidies will help to reduce the operating costs of our hawkers at the new centres in their initial years. These will support them as they build up their customer base.

There may be some other fees from value-added services that the SEHC operators provide, such as coin changing services, but these are optional.

Second, NEA will rebalance the soft touch regulatory approach towards SEHC operators and exercise greater oversight to safeguard hawkers' well-being. NEA has reviewed some of the key contractual terms between the SEHC operators and stallholders. Some of the terms were replicated from contracts the operators use in the other food establishments that they run. In practice, operators have actually exercised flexibility with these terms. NEA has taken in the feedback of hawkers and worked with the operators to make four key changes as an immediate priority.

Operators will be more flexible on stallholders' operating hours. Stallholders will not be required to work more than five days a week or eight hours a day, although they could if they wish to.

Operators will also engage stallholders who intend to open more than eight hours a day on how they intend to do so and whether they would have sufficient manpower, for example, through engaging stall assistants or joint operators. As asked by a Member, operators can also decide if it is feasible to install food vending machines to meet meal requirements beyond operating hours, especially for small meals or snacks.

Operators will not require a notice period of more than two months for stallholders to terminate their tenancies or require security deposits exceeding two months’ rental. This would address concerns of some stallholders being locked into their tenancies.

Operators who impose liquidated damages on stallholders for regulatory or other breaches will limit these payments to no more than $50 per day for minor ones and $100 per day for major breaches. They will also bear all legal fees related to the tenancy.

NEA will continue to engage both hawkers and operators to address concerns in other areas. For instance, at OTH, the community had initially asked for a 24-hour hawker centre. But as the demand from patrons has not materialised, both hawkers and the operator will recalibrate the arrangement. With the changes made to operating hours, hawkers who do not wish to continue with the 24-hour operations which they had previously signed up for, can do so now. NEA will also ask operators to communicate stall tenancy agreement terms in simple language to ensure that potential stallholders can understand them clearly before they commit to run the hawker stalls.

In our contractual review, we found that the operators, indeed, have shown flexibility. For example, we have not observed any operators charging stallholders rentals for the remaining of their tenancy terms, in the case of premature termination. The operators have also agreed to make changes to the terms I have just described, and to waive any legal fees for new tenancy contracts and renewals.

Whilst there is a need to rebalance our soft touch regulatory approach towards our SEHC operators, we recognise, as I have said, that they have shown flexibility through the contract review process, and are making changes to some of their terms and practices. They have also shown innovation and creativity in implementing measures to drive footfall to the centres. These include family carnivals and loyalty programmes, which offer discounts and other promotions to build up a pool of repeat patrons.

In fact, many of these operators have been bearing the cost of various initiatives to improve footfall at the centres, such as free shuttle bus services and free parking not long after the centres began operations. They are required under the terms of our tender to plough back at least 50% of any operating surplus for the social benefits of the hawker centres. This, plus our tender process which favours operators who charge lower total rental and operating costs and our prohibition on SEHC operators to increase any rental or operating costs over the tenancy period, limits the extent of any operating surplus.

These safeguards are part of our efforts to manage and reduce the risks of profiteering. We stand ready to act decisively should there be any mismanagement by the SEHC operators. Potential measures include imposing liquidated damages, or even termination of their contracts.

As part of our ongoing stocktake, NEA will look at the selection criteria for operators, what to leave to market forces and whether any other safeguards should be prescribed.

Third, all SEHC operators have set up structured feedback channels for their hawkers and have had at least one meeting. They will continue to engage their hawkers regularly and address concerns together and quickly. NEA officers will be present at these meetings. I am hopeful that such structured and regular meetings will help encourage communication, resolve day-to-day issues and also reduce misunderstandings.

I attended one of these meetings at Ci Yuan Hawker Centre. The atmosphere was constructive and stallholders had positive experiences to share. For example, Zhang Li Jun, a 29-year-old hawker who has been operating the "Teochew Satay Bee Hoon" stall since 2015, said that with the Hawkers' Feedback Group, operators could proactively seek hawkers’ views on various matters relating to the hawker centre and stalls, and also work together on ideas to help the centre do better.

I had a fruitful dialogue recently with HC3.0 committee members, hawkers and food advocates passionate about preserving our hawker culture. The participants contributed many ideas and we have agreed to set up a ground-up workgroup, comprising hawkers and other experts, to look at how to support new entrants to the hawker trade and sustain our hawker culture. We shall share details when ready.

Many of the new centres are doing well. When I visited Kampung Admiralty Hawker Centre recently, the place was crowded and many patrons shared with me that they were happy with the wide selection of hawker food at affordable prices. One patron even told me about the $2.60 mee siam sold by "The House 22". Similarly, I met a group of ladies who frequent the OTH Hawker Centre. They excitedly told me how happy they were with the many tasty hawker fare offered there, such as laksa by "Social Bite", and "Chicken Rice @ OTH". In fact, the father of Mr Kiang, who runs "Chicken Rice @ OTH", was among the pioneer batch of chefs who developed the famous Chatterbox chicken rice at Mandarin Hotel. So, I share with you this little secret, which means that the next time I go, it will be a longer queue.

But for those centres which are not doing so well, we are working with the operators and stallholders to increase footfall, improve business and serve their patrons better. What they need now is our support, not speculation and negative publicity that will keep patrons away and cause stallholders more hardship. The latest efforts to discuss and resolve issues through regular dialogue is the right way to go.

In summary, we will continue to make adjustments and recalibrate the SEHC model to ensure that it continues to achieve the key social outcomes of our hawker centres, which are: to provide affordable food in a clean environment, allow our hawkers to make a decent living and build communities. We will seek and listen to feedback from hawkers and patrons and continue with our stocktake to further improve the model.

Next year, we are nominating hawker culture for inscription on the United Nations Educational, Scientific and Cultural Organization (UNESCO) Representative List of the Intangible Cultural Heritage of Humanity. It is a community-based effort involving many stakeholders, including our hawkers, to sustain the hawker trade. The UNESCO nomination will be an important recognition of our hawkers, as we let the world know about our local food and multicultural heritage. As of 18 November, we have received 133,000 pledges online. I urge Members and all Singaporeans who have yet to pledge to do so on the Our SG Heritage website.

I am heartened by the passionate discussions and support for hawker food and our hawkers. To sustain the hawker trade and preserve our hawker culture, I urge everyone to patronise our hawker stalls and support them. I wonder if all Members in this House have visited our new hawker centres. If you have not, I urge you to show your support by visiting and patronising them with your families and friends.

Let me share that there are many interesting and tasty hawker fare at these centres. So, a few more secrets, including some of my favourites, such as delicious min jiang kueh by “Munchi” at Yishun Park Hawker Centre, chendol from the dessert stall at Ci Yuan Hawker Centre run by a young hawkerpreneur, and zi char from “Jian Fa BBQ Seafood” at OTH Hawker Centre, just to name a few. Parents should bring their children to our hawker centres to appreciate our hawker culture and heritage food. Our hawker centres should not be treated as nice-to-have dining options, but an important part of our living and evolving culture as, after all, we started building new hawker centres again because of the many appeals from the community for the hawker centres.

I am confident that our hawker centres will continue to thrive as community dining rooms, bringing together Singaporeans from all walks of life and strengthening our bonds as a country.

Miss Cheryl Chan.

Deputy Speaker, I would like to thank the Minister and the Senior Minister of State for their very elaborate response. I think many Singaporeans and myself really enjoy all the hawker food and we are supportive of the idea, including the need to try new models for what is relevant for our time. But for the fact that because the term is called "social enterprise", it needs to clearly demonstrate that there is this element of social benefits, whether it is for the hawkers themselves or even for the consumers. I have two clarifications that I would like to ask the Minister or the Senior Minister of State.

Firstly, for the grant that is given, for example, on the productivity initiatives, are these operators actually mandated to pass through all these benefits to the hawkers or are the hawkers paying extra for the e-payment system, the tray return system and so on?

Secondly, the Senior Minister of State mentioned about the need for 50% of the surplus to be translated back to social benefits. Can the Senior Minister of State elaborate more on what are these social benefits?

For the PHC Grant of 50% and 30% for first and second year respectively, these would directly benefit the hawkers, because 50% of the cost of the CDW will be deducted from the payment they have to make for the CDW. So, it would be a direct benefit to the hawkers.

Regarding the sharing of any operating surplus, it is in the terms of the tender agreement with the operator that, firstly, if they are not a social enterprise, they would have to set up a separate entity to tender for the hawker centre because we require them to submit an annual set of audited accounts to us. And if there are any operating surplus, the condition is that they have to plough at least 50% of this operating surplus back to benefit the hawker centre, the hawkers or the community. Some of the proposals that have been made by the successful tenderers are, for instance, providing meal vouchers for needy residents or the elderly within the community, or sharing some of this operating surplus with the hawkers in terms of providing discounted meal vouchers or one-for-one meal vouchers, for instance, like Yishun Timbre+ does, to give to the residents so that they can purchase and part of the meal would be funded from the operating surplus.

So, there are various programmes. Or it could be the training of hawkers or helping the low-income, for instance, to set up a hawker stall there. But if there is an operating surplus, they will have to propose how they want to plough this benefit back into the community or the hawker centre, and it would be subject to NEA's approval.

Er Dr Lee Bee Wah.

Sir, I would like to applaud NEA for resuming the building of hawker centres. It is a welcome move. In fact, I was one of those who lobbied very hard to have a hawker centre in Yishun. But many of us would like to see the hawker centres that are run by NEA that provide good and cheap food. I have three supplementary questions.

I know that the Minister and Senior Minister of State have explained about the social enterprise hawker centres. But a lot of residents are asking what is the definition of "social enterprise". We do not see voluntary welfare organisations (VWOs) who come in, but we see those social enterprises that are set up by big companies. So, what is their motivation?

The second question: does this translate into lower cooked food prices? Is there any study done? How do you ensure that economic meals that are available at the hawker centres are available all the time? Because residents have told me that they were very often told "卖 完 了", or sold out. If they want to buy the economic meals, the answer is, "卖 完 了". I would like to know whether there is any checking?

The third question: what I understand is that hawkers are managed by social enterprise hawker centre companies. Then, NEA staff oversee the social enterprise company. What my residents have been asking is: why can we not take away all these layers? Why can NEA itself not run the hawker centre, build up its own internal capability? This is something that many residents hope to see; they would like to see the old type of the hawker centres that offer good food at cheap prices, rather than giving us a hawker centre that is very beautiful but then, most of the time, the food is more expensive than at the coffee shops.

Lastly, I think the Minister did not answer my Question No 4 on the Incubation Stall Programme. I think there is such a programme and I would like to know how many have been under this programme and whether they continued beyond the incubation period and, if they do not continue, what are the reasons?

Could Members who are asking supplementary questions direct them to a specific Minister?

I would like to answer even the last question on behalf of the Minister as the Minister is actually very sick, with a bad flu. Let me answer the various questions that the Members have raised.

Thank you, Senior Minister of State.

The Member has raised five questions in total, I think.

Firstly, about the motivation of SEHCs. First of all, this SEHC that the media has been using is a bit of a misnomer. We actually started by saying "socially-conscious operators". So, what we are saying is, operators who tender for these hawker centres and run them, there must be a social mission. So, a social enterprise could be one of the operators or interested party to tender for the hawker centres, but not necessarily must be a social enterprise. What we have done is that within the tender conditions, we have ensured that there is a social mission. As I have said earlier, the Minister had also said, there are various safeguards that we have put in place in the tender conditions to ensure that we need the social objectives of the hawker centres that we started building again in the first place. And that is to ensure that we have affordable food options of a good variety in a clean environment, ensure that our hawkers can make a decent living and, of course, preserve our hawker culture and ensure the vibrancy of our hawker centres.

We have said a number of times what these are. For instance, we favour operators who offer lower rentals and total operating costs. They cannot raise these rentals and operating costs through the term of the tenancy agreement. As I have said, there is also the requirement to plough back any operating surplus for social benefits to the hawker centres, the hawkers and the community. A good example of a socially-conscious operator would be NTUC First Campus (NFC), which is part of NTUC and is a cooperative. In selecting SEHCs, we also look out for how we can harness their expertise, which is actually the recommendation from the Hawker Centre Public Consultation Panel that we try and leverage the experience of these operators in F&B and in business management, in order to be able to put in place various initiatives and ideas to ensure and enhance the vibrancy of the hawker centres.

In relation to that, the Member had a question about why not let NEA continue to run hawker centres. The Minister had elaborated in detail some of the reasons why we need to look at new management model for our new hawker centres. The reasons are because there are inherent challenges in the hawker trade: ageing profile of our hawkers, where our existing hawkers' age profile is 60 years, which means that within 10 years' time, one third would retire if we do not attract new hawkers into the trade. So, it is renewal, manpower constraints, as well as the evolving needs and tastes of patrons; how do you ensure that what you offer meets the needs and demands of patrons? Also, in existing hawker centres, as the Minister had elaborated, our existing hawker centres have been around for years; they are already established. Many of them have anchor hawkers who are able to pull in the crowds. But on the other hand, you would also note that many existing hawker centres, when you go, you are sometimes not sure whether the stall is open. Only 35% of our hawkers in existing hawker centres open for three meals. Most of them for one or two meals; some only work three to four days. So, does this then meet the needs of our community, especially the newer communities where there are many dual-income families and they need to access food through the day and through the week for three meals?

These are some of the challenges and, therefore, we looked at how we can try out and pilot new management models in order to overcome these challenges and to meet our social objectives. Indeed, SEHCs have resulted in positive outcomes. There are, of course, teething issues, and we are committed to looking at how we can recalibrate, make adjustments and improve the model, even as we look to implementing it for our new hawker centres.

Economical meals – how come they are not available? It depends on which point in time of the day you go to the stalls. Basically, the majority of the SEHC stalls do offer at least one affordable option. But let me say that we only ask that they offer at least one affordable option and we are not asking them to artificially suppress the prices of all their food options. In fact, they can sell all the other food options at different price points, and that is really the concept of a community dining room, where people from all walks of life can come together, share a table and enjoy a meal at different price points. And that will ensure that they will be able to make a decent livelihood. Whichever hawker centre does not have enough of those economical meals, we can talk about it and we can talk to the operators. I have been to many of them and they do offer affordable options, and these are good options.

Regarding the question on incubation stalls, we have launched an Incubation Stall Programme last year, just about over a year ago. When we started, we identified 13 stalls that we pre-fitted and we offered these to aspiring new hawkers who are not sure if they are interested to join the trade; they are passionate but they are not sure if they can make it. So, we offered these stalls to them, subject to certain conditions, of course. They can rent these pre-fitted stalls for six months at 50% of the assessed market rent, and that is to allow them to try out. It is pre-fitted, so we reduce the initial capital cost.

So far, we have received some 40 applications. We have increased the number of incubation stalls to 15. Ten stalls have been taken up and we have a list of applicants now which we are processing to lease out the remaining incubation stalls. This actually complements the Entrepreneurship Programme and the Place and Train Programmes offered by the SEHC operators because many of the operators also offer training and entrepreneurship programmes for new hawkers. In fact, they have actually been relatively successful. Ci Yuan, for instance, trained 16 aspiring hawkers and 10 are still in Ci Yuan Hawker Centre, and they have converted to permanent hawkers and are doing well. One of them just got married.

Mr Liang Eng Hwa.

Sir, while I can appreciate the merits of the social enterprise model and, indeed, we should continue to let the model evolve, I want to ask the Minister or Senior Minister of State whether the social enterprise model is the only way to go for new hawker centres. Is NEA open to other models as well, such as, for example, Management Corporation Stata Title (MCST)-type, where the hawkers can come together to self-manage, or for NEA to still run the new hawker centres at least for a while and then transiting to the non-NEA-run model?

I think we are open to any model as long as it is able to achieve the social objectives that we have set up for our new hawker centres, which is about providing affordable food options, moderating food prices, ensuring that the hawkers make a decent living and building communities.

So, clearly, we are open. But we also need to note that whatever model that we may adopt, there will always be challenges even as there may be benefits and, therefore, we need to give it time to settle down. Our SEHC model is a good example. We implemented it only about three years ago. In fact, the last one, Pasir Ris Hawker Centre, was just opened this year. So, it is really in its infancy; it is still evolving. We had set it up with the intention that we will continue to monitor, evaluate, refine and improve the model.

But having said that, the SEHCs, at the present moment, have actually resulted in many positive outcomes for both patrons as well as hawkers and we do not want to undo those achievements. Therefore, we will see how we can better calibrate and make adjustments to the model. But as I have said, we are open to any model because the idea really is to benefit patrons, Singaporeans and hawkers.

We are one hour into this topic. I am going to ask Assoc Prof Walter Theseira, then Gan Thiam Poh and Melvin Yong.

Mr Deputy Speaker, I thank the Minister and Senior Minister of State for their patience in addressing our questions. My question is: if hawkers are self-employed, then how can they be compelled by social enterprises or by the Government to work certain hours or to meet other conditions of work? The problem seems to be that we are expecting the hawkers to bear some of the burdens of being an employee, but without the benefits of a guaranteed and stable income, for example.

First of all, let me say that we have actually worked with our operators. So, now, one of the key changes we have made to the contracts is that they need not open more than five days. They are required to open only five days, eight hours a day. The hawkers are small businesses, entrepreneurs. They enter into an agreement with the operators to operate a hawker stall subject to, of course, various conditions that they are agreeable to, and these are some of the conditions.

The reason why you have to implement some minimum operating hours as well as minimum number of days, really, is because we want to make sure that the hawker centres are able to provide three meals – breakfast, lunch and dinner, throughout the day, and throughout the week – in order to ensure the vibrancy of the hawker centres. The hawker centres are built to serve the community, and one of the needs of the community, as I have said, especially in newer housing estates, is to have access to these food options for the three key meals. If you do not agree to such operating hours, then it would come back to the same thing that in some existing hawker centres, when you go there, they are closed or they are open for only half a day and it does not serve the needs of the community. So, we are not compelling them. They actually enter into the agreement voluntarily and knowingly.

Mr Gan Thiam Poh.

Senior Minister of State, I think my question has yet to get an answer, that is, cost structure between the subsidised and non-subsidised stalls, one by NEA and one by another model. I would like to know, generally, what are the operating costs, what are the similar ones and what are not the subsidised ones.

First, let me explain that for both our existing hawker centres and our new centres, the construction costs of the hawker centres, as well as the cost of upgrading and maintaining the hawker centres are not recovered through the rentals. So, there is already an implicit Government subsidy for both.

The cost structure for both existing centres' non-subsidised stalls and new centres, really, is quite similar. Earlier on in my reply, I already gave a comparison in terms of rentals, that, basically, they are quite comparable and in line, taking into account the differences in age, stall size and so on of the hawker centres. In terms of operating costs, it is also quite similar, and I have also given Members a comparison. There will be costs in terms of service and conservancy charges, table cleaning. These are the key ones. For dishwashing, what you see, for instance, when you compare, some people will say, "How come it is much lower in the existing hawker centres?" That is because of the cost element of dishwashing is often not taken into account in the existing hawker centres since most of the existing centres do not have CDWs. But if you were to take that in, you have to employ somebody for say, $1,500, just to wash dishes, or if the existing hawker centre has a CDW system, then the essential costs are actually quite similar.

Mr Melvin Yong.

Mr Deputy Speaker, I would like to ask the Senior Minister of State on hawker stall rentals. I believe that the Senior Minister of State said that the higher end of the hawker stall rental range is around $13,000. At about $3.00 or $3.50 a plate, the hawker will need to sell at least 3,000 plates just to cover the rent. If our hawker stalls are to serve the objective of keeping our food prices affordable, will the Ministry consider implementing a cap on the rental to better manage food prices? Even at half that rental, at $5,000, you will still need sell at least 1,500 to 2,000 plates a month just to cover the rental.

Let me correct the Member. I did not say that the top-end rental at our hawker centres is $13,000. The range of $4,000 to $13,000 is, based on our survey, the rentals for coffee shops and food courts, not hawker centres. That is very important. What I said was that the rental of our hawker centres, new hawker centres, is nowhere near to where the rentals are for food courts and coffee shops which range, based on our survey, from $4,000 to $13,000, net of operating cost. The rentals for our new hawker centres, median rental, is about $2,000, net of operating cost.

As I have said earlier, what we are asking is that, to achieve our social objectives of offering affordable food prices as well as moderating food prices in the vicinity, at least one food option which is affordable, and most of these new centres have put that at about $3.00 or $2.

80. Just one food option. We are not asking them to sell everything at budget prices. Therefore, they have a range of options. In fact, if you go to the hawker centres, there is a soup stall that I saw in Kampung Admiralty, the prices range from $2.80 to $14.00 because it is premium; maybe there are scallops and all that.

Er Dr Lee Bee Wah, would you ask the next question? Next question, please? Question No 10.

Can I ask one more supplementary question, please?

Okay, I will allow one last supplementary question.

Thank you, Sir. The Senior Minister of State mentioned that 50% of the surplus from the social enterprise must be ploughed back to the hawker centres or hawkers. I would like to find out what will happen to the remaining 50%. Does it go back to the company?

Actually, to Member Melvin's question about rental cap which I have forgotten to comment on, our existing hawker centres, the non-subsidised stalls, are actually let out by tender. So, there is already a range of rental indications, and, in fact, we have removed the reserve rent. Therefore, even for our new hawker centres, when we evaluate the tenders, there are two things that we do. First, we get the professional valuers to assess what a reasonable market rent will be, and they actually make reference to the tendered rents of the existing hawker centres, and we also use that as a guide. So, we will continue to monitor rentals to ensure that they are fair and reasonable to our hawkers so that they can make a decent livelihood.

With regard to the 50% surplus, at least 50% must go back to social benefits, the other 50%, of course, they can keep. But so far, for our new hawker centres, those that have already submitted their audited accounts, none of them had accumulated any operating surplus. It has only been one to three years. It just goes to show that just as new hawker centres need time to build up, to establish themselves, so do the operators.

20 Er Dr Lee Bee Wah asked the Minister for Trade and Industry in view of the impending takeover of Kopitiam by NTUC Enterprise (a) how will the Government ensure that cooked food prices remain low and affordable; and (b) whether this takeover violates the anti-competition rules.

21 Mr Dennis Tan Lip Fong asked the Minister for Trade and Industry (a) whether the proposed acquisition of the Kopitiam food operator chain by NTUC Enterprise will result in a substantial lessening of competition; and (b) whether the acquisition will be suspended pending the approval of the Competition Commission of Singapore, so as to avoid a repeat of the situation with Grab's acquisition of Uber's Southeast Asian operations where its impact on ride-hailing platform services in Singapore could not be reversed.

Mr Deputy Speaker, with your permission, I would like to take Question Nos 20 and 21 together, please.

Yes, please.

The Competition and Consumer Commission of Singapore (CCCS) has been notified of the National Trades Union Congress (NTUC) Enterprise's proposed acquisition of Kopitiam and its subsidiaries on 28 September 2018 and is currently assessing the transaction. NTUC Enterprise has committed not to proceed with the merger until CCCS has issued its decision.

There are many factors influencing food prices, such as cost of raw materials and manpower costs. The Government does not set food prices. Instead, we focus our efforts on helping Singaporeans to have access to affordable food options. For example, the Housing and Development Board (HDB) has reviewed tender mechanisms to consider factors, such as affordability, when tendering eating houses. The Ministry of National Development (MND) and the Ministry of the Environment and Water Resources (MEWR) have also announced plans to build more HDB eating houses and hawker centres in future. Such measures will allow consumers to make informed purchasing decisions across a range of cooked food choices.

Er Dr Lee Bee Wah.

Sir, I have two supplementary questions for the Senior Parliamentary Secretary. His answer is very short. My questions should be very short.

First question: I read from the report that Kopitiam management will continue to manage those coffee shops. I would like to ask: is there a bottom line report requirement? If yes, how to achieve a social mission?

Second question: yesterday, I was at Block 504 Kopitiam. Out of six stalls, only one stall was open and one drinks stall. So, why did Kopitiam bid for that coffee shop and leave it empty for the last two, three years? Is it to build up the volume, preparing for this transaction? Is it fair to my residents? I would like to tell the Senior Parliamentary Secretary to please do not tell me it is not under the Ministry of Trade and Industry (MTI) and ask me to file a separate Parliamentary Question (PQ).

I thank the Member for her question. Indeed, the precise inner workings of a private enterprise are not immediately within the purview of MTI. [Laughter.] However, if the Member wishes to file a separate PQ to the relevant agency or agencies, I am sure my colleagues will be happy to oblige as best as they can.

Er Dr Lee Bee Wah.

I would like to ask the Senior Parliamentary Secretary: is he aware that there is such a thing as "no wrong door" policy? Perhaps, he would like to check with his colleague in MND or HDB and get back to me.

I thank the Member for her question. Indeed, there is a "no wrong door" policy. As part of the "no wrong door" policy, it is also incumbent on us to advise Members if the question may best be answered by a department with the appropriate knowledge, competency, understanding and jurisdiction. I seek the Member's understanding on this, please.

22 Mr Darryl David asked the Minister for Manpower (a) over the past three years, how many cases are there of domestic helpers who have defaulted on loans from licensed moneylenders; (b) whether the Ministry intends to implement any restrictions on domestic helpers taking such loans; (c) what are the consequences for such repeat defaulters; and (d) what are the consequences for their employers.

23 Mr Darryl David asked the Minister for Manpower (a) over the past three years, how many domestic helpers have taken loans from unlicensed moneylenders; (b) what are the consequences for such domestic helpers; and (c) what recourse do the employers of these domestic helpers have should they be harassed by the unlicensed moneylenders.

24 Mr Sitoh Yih Pin asked the Minister for Law (a) what is the number of foreign domestic workers who have procured loans from licensed moneylenders in 2017 and 2018; (b) what are the liabilities for employers of foreign domestic workers who default on repayment of such loans; and (c) whether the Ministry has any plans to place any restrictions on foreign domestic workers procuring such loans.

Mr Deputy Speaker, Question Nos 22, 23 and 24 that relate to the portfolios of both the Ministry of Law and the Ministry of Manpower. May I seek your permission to provide a combined reply to parts (c) and (d) of Question No 22, parts (b) and (c) of Question No 23 and part (b) of Question No 24. The Senior Minister of State for Law Mr Edwin Tong will address the remaining parts of the questions. With your permission, please.

Yes, please.

Mr Deputy Speaker, Mr Darryl David and Mr Sitoh Yih Pin asked about the consequences for foreign domestic workers (FDWs) and employers, and the recourse for employers when FDWs borrow from licensed and unlicensed moneylenders. I will address these questions together.

Where licensed moneylending is concerned, FDWs who do not repay their loans may be subject to civil action by licensed moneylenders, as with any other borrowers. Employers of FDWs are not liable to repay any of their FDWs' loans. It is an offence for licensed moneylenders to harass the FDWs or their employers for repayment or employ an agent to do so. FDW employers who are harassed should report to the Police.

We do not condone any borrowing from unlicensed moneylenders by foreign workers. To send a clear signal of our strong stand, the Ministry of Manpower (MOM) had earlier announced that if a work pass holder is found to have borrowed from unlicensed moneylenders, the employer will be informed and the employee's work pass revoked. The foreign worker will then be repatriated and debarred from further employment in Singapore.

The rule against borrowing from unlicensed moneylenders will be implemented in 2019, following a period of education and communication with work pass holders and their employers. We will intensify efforts to help them learn about money management and the risks of borrowing from moneylenders.

Any person who is harassed by unlicensed moneylenders should report such activities to the Police. From 2008 to September 2018, the Police registered about 460 reports of harassment by unlicensed moneylenders arising from FDWs borrowing or acting as guarantors. The Police and Attorney-General’s Chambers have prosecuted errant debt collectors who have violated the law and will continue to take strong enforcement action against such conduct.

With your leave, Mr Deputy Speaker.

Yes, please.

Mr Darryl David and Mr Sitoh Yih Pin asked for statistics on FDWs who have taken loans from licensed and unlicensed moneylenders. Mr David and Mr Sitoh also asked if the Ministry of Law (MinLaw) intends to place any restrictions on FDWs taking such loans. Let me deal with both questions together.

The number of FDWs who took loans from licensed moneylenders was approximately 1,500 in 2016, 12,000 in 2017 and 28,000 in the first half of 2018.

Moneylending regulations do not formally define a "loan default". However, estimates based on Moneylenders Credit Bureau (MLCB) data from 2016 to the first half of 2018 show that the majority of FDWs have repaid their loans from licensed moneylenders.

The Police have also observed more foreigners residing in Singapore, including FDWs, borrowing from unlicensed moneylenders.

There are currently several measures to protect all individuals who borrow from licensed moneylenders. For example, the Moneylenders Rules permit a licensed moneylender to charge only the following for each loan:

an upfront administrative fee of up to 10%;

interest of up to 4% per month;

late interest of up to 4% per month; and

late fees of up to $60 per month.

The Registrar of Moneylenders had issued Directions to regulate moneylenders' activities. In particular, moneylenders are prohibited from advertising their loans to members of the public via mobile text messages or emails. Moneylenders are also prohibited from conducting abusive practices, such as repeatedly "rolling over" existing loans to charge the administrative fee multiple times even though no new credit is issued; or offering split loans so that late fees can be charged multiple times, per loan, each month.

In view of the recent increase in foreigners borrowing from moneylenders, on 4 October 2018, MinLaw announced two measures to strengthen protections for FDWs and other foreigners residing in Singapore from the effects of over-borrowing.

First, the Ministry will impose aggregate loan caps to limit the total amount that any foreigner residing in Singapore can borrow from licensed moneylenders. The caps were first announced for Singapore Citizens and Permanent Residents under the Moneylenders (Amendment) Bill in January this year, and the caps are:

individuals earning up to $20,000 a year may borrow up to $3,000; and

individuals earning $20,000 or more a year may borrow up to six times of their monthly income.

Both caps will be extended to all foreigners residing in Singapore. In addition, there will also be a lower cap of $1,500 for all foreigners residing in Singapore who earn less than $10,000 annually.

Second, the Ministry will also introduce a self-exclusion framework for all individuals who borrow from licensed moneylenders. Both Singapore residents and foreigners may apply for self-exclusion. Licensed moneylenders will be prohibited from lending to self-excluded individuals.

This framework will help individuals to control their borrowing habits and to participate in debt assistance schemes administered by voluntary welfare organisations which typically also require self-exclusion.

MinLaw, together with MOM and the Singapore Police Force, will continue to monitor the situation following the implementation of these measures and will assess if more stringent measures are necessary.

Mr Darryl David.

Mr Deputy Speaker, I thank the Senior Minister of State and the Senior Parliamentary Secretary for their replies. Two supplementary questions to ask. It is heartening to hear that there are measures that are being taken with regard to self-exclusion and the caps. This is pertaining to licensed moneylenders. Would it be useful for the Government to consider, perhaps in light of the fact that the employers are usually the ones who have to suffer the consequences should FDWs default on their licensed moneylending loans, to have a practice where the employer's consent needs to be sought before FDWs approach licensed moneylenders for loans? So, in a way, if you look at the self-exclusion for the casinos, for example, I understand that family members can also choose to exclude certain family members. That is the practice. So, my question is, can the authorities consider with the case of licensed moneylenders, for the employer's consent to be sought before the FDW makes that loan with the licensed moneylender?

The second supplementary question is relating to the issue of unlicensed moneylenders. As far as I understand it right now, it is not an offence to take a loan from an unlicensed moneylender. Am I correct, Senior Minister of State?

That is correct from a borrower's perspective. It is not legal for a moneylender to carry out a business without a licence.

I thank the Senior Minister of State. With that clarification, Mr Deputy Speaker, what usually happens then is that perhaps if the FDW makes that loan and she then has her employment terminated by the employer – understandably, when the employer finds out – she returns. As she has committed no crime, the FDW is technically able to return to the country again and perhaps, this entire cycle is repeated by which the FDW then perpetuates further inconvenience and stress on her new employer. Would the authorities consider perhaps in such cases some measure – I understand the concept of innocent until proven guilty – whereby such FDWs are either placed on a watchlist or even barred from returning until this matter can be clarified, to avoid further inconveniences down the road?

Would MinLaw or MOM be answering?

MOM is answering. I want to thank Mr Darryl David for the supplementary questions. Let me assure Mr David and Members that while the number of FDWs borrowing from licensed moneylenders has increased, the majority of them repaid their loans and the default rate remains low. His first supplementary question is that if the FDW goes to a licensed moneylender, whether the moneylender can seek the consent of the employer. We have considered that – the pros and the cons. At present, MOM has not made it mandatory for the FDW to seek consent or for the moneylender to do so. We have also not made it mandatory for the FDWs to disclose their borrowings from licensed moneylenders to their employers, simply because if and when we do so, it may well trigger the FDWs towards taking more drastic actions, such as gravitating towards borrowing from the unlicensed moneylenders, just so as to avoid telling the employers. So, it is a very delicate balance.

The second question on if the FDW goes to unlicensed moneylenders and the employer sends her back, whether we can put her on a watchlist. This is where MOM has said that in support of MinLaw's new measures, we will deter FDWs from borrowing from unlicensed moneylenders. Come next year, we will effect the debarment measure after a period of education and communication with FDWs and also with employers as well as other stakeholders who could be affected. We will announce the effective date at a later time.

When the debarment measure comes into effect, what will happen is, the debarment period set is based on the facts of the case. Allow me to also add that MOM will step up our education efforts to the new FDWs through our settling in programme to share with them the importance of money management and also the risks and implications of borrowing, over-borrowing and borrowing from moneylenders, in particular, unlicensed moneylenders.

Here, we would like to appeal to all employers of FDWs to also share the importance of money management and the risks and implications of borrowing.

Mr Louis Ng.

Mr Deputy Speaker, can I just ask the Senior Parliamentary Secretary whether MOM is studying why the FDWs are borrowing money during their employment in Singapore? What are the main reasons? If we are not studying it, can I ask whether MOM is willing to conduct this study so that we understand what the root of the problem is, and then we can really address it?

I want to thank Member Mr Louis Ng for his question. Yes, we have been looking into all the possible reasons. Anecdotal evidence tells us that, in certain cases, FDWs borrow from the licensed moneylenders to tide through certain requests from home, such as unforeseen medical bills, college fees for their children and so on. They need to borrow this amount of money for a month before they receive their next pay cheque from the employers. We are thinking through and we will certainly consider mounting a study to understand this a little more.

Mr Yee Chia Hsing.

I would like to highlight that there are a lot of unlicensed moneylenders that pass off as licensed moneylenders. And not to mention FDWs, but even my residents would receive short message service (SMS) from unlicensed moneylenders and they just go ahead to borrow money from them. These turn out to be unlicensed. The measure of sending the FDWs back seems very drastic because the FDW may not know. Can we exercise some flexibility so that, with the consent of the employer, they can actually continue to stay in Singapore?

Two parts to the question. First, we will intensify the education efforts to help FDW understand who are the licensed vis-à-vis the unlicensed moneylenders. For employers who wish to continue hiring their FDWs who are debarred for various reasons – maybe because they are pending the arrival of a new FDW – they can certainly put in a request to MOM, and we will look at it on a case-by-case basis.

Order. End of Question Time. Ministerial Statement. Minister for Foreign Affairs.

[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.]

Mr Deputy Speaker, thank you for giving me the opportunity to address Parliament. This has been a very busy year for Singapore on the foreign and global stage. Prime Minister Lee, who by the way has just returned from the Asia-Pacific Economic Cooperation (APEC) meeting, suggested that I address Parliament because after all, foreign policy begins at home. It is essential that all of us are privy to all the activities that we have been conducting, and I will be happy to take questions from Parliamentarians after this Statement.

We have witnessed – in fact, we are witnessing – a global order in very rapid transition. It is marked by big superpower rivalry, rising protectionist sentiment, xenophobia and, in the midst of all this, an ongoing technological digital revolution. As a small country, we have to respond, and we have to respond nimbly in a very volatile global environment, we have to make ourselves relevant to all powers big and small, and we have to enlarge, to the maximum extent, the political and economic space for all Singaporeans. To this end, Singapore has worked very hard to make progress on several diplomatic and economic initiatives, and we have redoubled our efforts to support a rules-based world order and also to buttress the international trading system. This year also happened to be the year that Singapore chaired ASEAN, and we had, therefore, to host a large number of regional and international events. I want to thank all those who have been working so tirelessly over the past year, and especially our staff from the Civil Service, entire Government as well as the private sector and, of course, our fellow Singaporeans. Without this whole-of-Nation effort, we could not have achieved all that we have achieved this year.

Let me start with the Association of Southeast Asian Nations (ASEAN) Chairmanship which we just concluded last week with a series of Leaders' Summits, including all the ASEAN Leaders, that is, 10 of them. As well as them, we also had Leaders from the United States (US), Russia, China, India, Japan, the Republic of Korea (ROK), Australia, New Zealand, Canada and Chile. Twenty Leaders present in Singapore last week. In addition to that, we also had Ms Christine Lagarde, Managing Director of the International Monetary Fund (IMF). We sought to strengthen ASEAN's Unity and Centrality and, in particular, to turn challenges, existential challenges into opportunities. And that is why, during this year, when we were ASEAN Chair, we focused especially on enhancing ASEAN Centrality, unity and coherence; second, to accelerate ASEAN's economic integration; and third, on equipping people throughout ASEAN with the skills needed for new jobs in the digital revolution.

Members can see that actually we have focused very much obviously within Singapore on SkillsFuture. But in fact, this is a need in all countries – skills for new jobs in the digital revolution. Furthermore, we have also sought to enhance interoperability of digital and trading systems within ASEAN. I have also asked the Clerk to distribute an infographic which summarises the variety of initiatives that we launched this year. Whilst it is circulating, let me continue to address all Members.

Strengthening a rules-based world order has been key to regional security and peace. In fact, it is this post-World War II liberal economic global environment and adherence to a rules-based multilateral system that have given us peace for 70 years. And, in particular, created enormous opportunities for a tiny "red dot" like Singapore. So, this remains a constant focus for the Ministry of Foreign Affairs (MFA). More specifically, this year, under ASEAN, we finalised the Model ASEAN Extradition Treaty, and work will soon begin on an ASEAN Extradition Treaty. In addition, the ASEAN Defence Ministers adopted the Guidelines for Air Military Encounters. These are the world’s first multilateral guidelines to manage unintended encounters between military aircraft. This will make for a safer and more secure aviation environment in our region.

Terrorism and cyberattacks are, unfortunately, a clear and present danger. We enhanced regional counter-terrorism cooperation through the "Resilience, Response and Recovery" Framework and we also held a Symposium on a Collective Approach to Counter-Terrorism. ASEAN, for the first time, adopted a Leaders’ Statement on Cybersecurity Cooperation at the 32nd ASEAN Summit in April this year, and Singapore announced the ASEAN-Singapore Cybersecurity Centre for Excellence in September this year.

In August, we completed our three-year term as the ASEAN-China Country Coordinator. A key milestone of these three years was the formulation of a Single Draft Negotiating Text for the Code of Conduct in the South China Sea. Members will appreciate that this is, in fact, a very sensitive and very difficult issue that we have been grappling with for many years. And not just us because, in fact, we are not a claimant state, but four ASEAN members are claimant states that have overlapping claims with China. Fortunately, we have witnessed patient, meticulous diplomacy and all the parties involved – China and ASEAN – have been able to lower temperatures, and we have been able to work constructively. We also brokered an ASEAN consensus on an ASEAN-China Maritime Exercise after nearly three years of discussions, and we co-directed this exercise with China last month.

On the economic front, ASEAN has stood against the tide of protectionism. We made substantial progress on the negotiations for the Regional Comprehensive Economic Partnership (RCEP). RCEP includes the 10 ASEAN countries and includes the other six which are China, Japan, ROK, India, Australia and New Zealand. ASEAN Leaders committed to conclude the RCEP in 2019, next year. We emphasised closer economic integration through agreements on the ASEAN Single Window, the ASEAN-wide Self-Certification scheme and the ASEAN E-Commerce scheme. Without getting into the details, the point is that these initiatives will facilitate cross-border flows of goods and services within ASEAN, especially as businesses increasingly go digital, and this will ultimately enhance intra-ASEAN trade and opportunities for small and medium enterprises (SMEs) to service the expanding consumer market in ASEAN.

We established our flagship project, the ASEAN Smart Cities Network. This network will create a common framework for smart city development and the mutual exchange of action plans. The network will also connect cities with external private sector partners which will enable us to co-develop solutions for sustainable urbanisation, and members will appreciate that sustainable urbanisation is another mega-trend of our time. Collectively, these efforts will ensure that ASEAN remains vibrant, dynamic, relevant and will create bountiful opportunities for our businesses and our citizens.

We have also contributed to regional humanitarian assistance and disaster relief efforts. And perhaps at this juncture, I should say a few words about the humanitarian situation in Rakhine State.

I visited both Bangladesh and Myanmar earlier this month, and I also made a trip to the refugee camps in Cox's Bazar. This was shortly after both countries had announced their intention to commence the process of repatriating a first wave of refugees. I must say that, based on my own observations at the camp, the Bangladesh government has actually done a really admirable job of providing humanitarian assistance for a very large number of refugees in a very short order of time. But having said that, having also visited the camps, the current situation is unsustainable. As long as the refugees remain in the camps, and have no jobs and means of livelihood, they will have no future prospects. Therefore, we have to welcome the fact that both Myanmar and Bangladesh are engaged in direct, detailed discussions on making preparations for the commencement of repatriations. This is a critical first step. It is not a complete solution and there are many, many details that still need to be sorted out. Nevertheless, we do need to witness the commencement of a process and to make sure it is done in a way that provides for the refugees to return in a safe, secure and dignified way.

The situation in Rakhine State is of concern to all ASEAN member states. At the 33rd ASEAN Summit last week, all ASEAN Leaders discussed how ASEAN can support the efforts of both Myanmar and Bangladesh for the safe, voluntary return of refugees. We welcomed Myanmar’s commitment to ensure the safety and security of all communities in Rakhine State. Myanmar has invited the ASEAN Coordinating Centre for Humanitarian Assistance on disaster management to despatch a needs assessment team to Rakhine State in order to facilitate the repatriation, and ASEAN has agreed to do so. ASEAN stands ready to support efforts by all parties to address the root causes of the situation in the Rakhine State. Fundamentally, race, language, religion continue to remain live issues in our region and, indeed, across the world. Ultimately, it is the responsibility of the Myanmar government and its respective stakeholders to find a viable and durable long-term political solution. And as I have said before in this Chamber, we cannot expect quick fixes.

Twenty-eighteen has also been about bringing ASEAN to our young people. For instance, we organised the first-ever ASEAN E-sports and music festival, we renewed the Singapore-ASEAN Youth Fund, and we launched the ASEAN Youth Fellowship. These schemes provide for shared experiences of sportsmanship, community service and entrepreneurship, and we hope that this will spur more youths to get involved in ASEAN activities and strengthen our ASEAN Community and, ultimately, even more important, to strengthen the ASEAN identity amongst young people across Southeast Asia.

Our Chairmanship this year has been a whole-of-nation effort and it involves, as I said earlier, all Government agencies, our media, universities, think tanks, the private sector and the non-government organisations (NGOs). ASEAN has given us a collective platform to improve the lives of our citizens, and make our voices heard on the world stage. Post-2018, Singapore will continue to play the role of "Shepherd" for the ASEAN Smart Cities Network, and we will continue to bring new ideas to the table. There is still much more that ASEAN can achieve, and we will work with our counterparts to build a more united, resilient and innovative ASEAN in the years to come. ASEAN remains a cornerstone of our foreign policy.

Let me now move on to areas beyond ASEAN.

First, our standing as a trusted partner on a global level. There were at least two events which reaffirmed our reputation as an impartial, reliable and capable partner.

The first was the Summit between US President Donald Trump and the Democratic People's Republic of Korea (DPRK) leader Kim Jong Un on 12 June this year. Much has been said about the Summit, and I do not want to go through all that again. But the point I want to drive home is this: that we are a small country, but we can be counted on to deliver when necessary. We did not volunteer to host the Summit between the US and DPRK, but we were asked by both sides, and when we were asked, we could not say no. And so, we are proud that it went well, and that we had played a small part in easing tensions on the Korean Peninsula.

In fact, if Members just cast your minds back a year ago, the situation was extremely tense, rife with fiery rhetoric and provocative actions. Today, things are much calmer. And we hope that, given time and further negotiations and constructive diplomacy, there will be sustained peace and stability, and a fully denuclearised Korean Peninsula. Our region, and indeed the world, will be much better off for it.

Another event that I want to highlight more recently is the Bloomberg New Economy Forum. Members may be aware that, in fact, China was originally supposed to host this Forum, but when that did not materialise, Bloomberg had to relocate the event very, very urgently. Singapore again was their obvious choice. So, over two days in the first week of November, we witnessed the arrival of global business and political leaders gathered in Singapore to discuss the challenges confronting the world economy and possible solutions. The Bloomberg founder and former New York City Mayor Michael Bloomberg, Chinese Vice President Wang Qishan, and former US Secretary of State Henry Kissinger were all in town in that week. They joined some of the many other luminaries who came to attend the Forum. We were happy to be able to facilitate and to participate in these important discussions. And it is in our interest to add value and to make ourselves relevant to the global business community.

Overall, both these major events enabled us to raise our standing in the world and fly our flag high.

Let me now turn to relations with our immediate neighbours, in a sense, an update. With Malaysia, we have had a positive momentum of high-level exchanges with the new Pakatan Harapan government. We just hosted Prime Minister Mahathir to an Official Visit last week, and our leaders will meet again next year for the annual Leaders' Retreat. My Cabinet colleagues and I have built good rapport with our new Malaysian counterparts. Malaysia has a new, diverse and lively Cabinet – in fact, their ages range from 25 to 93 and I think that is a world record – but we do share many aspirations and challenges. And I can speak certainly for the younger Ministers, both in Singapore and Malaysia, that there is good rapport, there is good communication, we are all on Whatsapp and various other digital means of communication. This sometimes raises concern amongst the staff. But I can assure Members that we are not revealing state secrets! But nevertheless, that ability to communicate instantly, quickly and appropriately helps to build trust.

Issues will inevitably arise from time to time in our relations, and we will seek constructive ways to resolve them, while firmly protecting our national interests. On fundamental issues, and one key fundamental issue is the 1962 Water Agreement. On this case, our position is clear, consistent and has been articulated on many occasions, including in the Prime Minister's National Day Rally speech and, in fact, in my own Parliamentary Statement in July this year. On Pedra Branca, we welcomed Malaysia's decision to discontinue their applications for both a revision and interpretation of the International Court of Justice's original 2008 Judgment. I am glad that both sides followed due legal process and put the matter to rest. On the High Speed Rail (HSR) project, we reached an agreement with Malaysia to suspend the construction of the HSR up till 31 May 2020. The significance of that date is that it will be exactly two years from when the new government took over in Malaysia. We did so in a spirit of bilateral cooperation and goodwill and, at the same time, protected our interests and rights under the Bilateral Agreement. Overall, the outcome was balanced and reflected both countries' commitment to uphold agreements and to advance bilateral cooperation.

With Indonesia, our relations are in good shape, underpinned by the robust and expanding economic cooperation, for example, in projects like the Kendal Industrial Park in Central Java and the Nongsa Digital Park in Batam, which, in fact, I launched with Foreign Minister Retno Marsudi in March this year.

The highlight of the year was the Singapore-Indonesia Leaders' Retreat in Bali last month. This was, in fact, the Prime Minister's third Retreat with President Joko Widodo. At the Retreat, we signed a Bilateral Investment Treaty and six other agreements across a diverse range of sectors, including tourism, the digital economy and culture. Our Leaders also announced a bilateral agreement between the Monetary Authority of Singapore (MAS) and the central bank of Indonesia, and this bilateral agreement has since been signed. This bilateral agreement provides for a US$10 billion package, that comprises a local currency swap and a US dollar repurchase agreement to support monetary and financial stability, and to strengthen investor confidence in our region. These agreements reflect our belief that Indonesia's economic fundamentals are strong and that Indonesia is a large and dynamic market, with many opportunities for Singapore businesses.

Another initiative announced at the Retreat was the "RISING Fellowship". This is a fellowship scheme to deepen ties between Singaporean and Indonesian regional leaders. We wish Indonesia smooth elections in I believe April next year and look forward to continuing our mutually beneficial cooperation with them.

In 2018, we also reaffirmed our special and longstanding relationship with Brunei. In fact, President Halimah made her first State Visit to Brunei in May 2018 at the invitation of His Majesty the Sultan. Earlier this month, we also welcomed His Royal Highness Crown Prince Billah and a delegation of Bruneian Ministers for the sixth edition of the Young Leaders’ Programme. This is a key programme that enables the younger leaders on both sides to deepen personal ties and enhance trust and confidence.

Let me now turn to our relations with the major powers. Let us start with China.

This year is, in fact, an especially significant year for Singapore-China relations. It is the 40th anniversary of Mr Deng Xiaoping's visit to Singapore on 12 November 1978. Both sides have maintained a steady cadence of high-level exchanges. This year, Prime Minister Lee, Deputy Prime Minister Teo and Deputy Prime Minister Tharman have all visited China; whilst on their side, Premier Li Keqiang, Vice President Wang Qishan and Vice Premier Han Zheng have also visited Singapore in recent months.

We continue to build on our deep and substantive cooperation with China. During Premier Li’s visit last week, we substantially, and I make that point, substantially upgraded the Singapore-China Free Trade Agreement. This will enhance bilateral economic cooperation between China and Singapore. We have also made good progress on all three Government-to-Government projects, the Suzhou Industrial Park, the Tianjin Eco-City and the Chongqing Connectivity Initiative (CCI). In fact, there is a new acronym in town. CCI now has a New International Land Sea Trade Corridor (ILSTC). This was formerly called the Southern Transport Corridor. The CCI-ILSTC connects the overland Silk Road Economic Belt with the 21st Century Maritime Silk Road. It will enhance infrastructure connectivity and commerce within China, and between China and Southeast Asia. In fact, one of the reasons for the name change – and this suggestion came from China – was to make the point that they are talking about bilateral two-way flow of goods and services between China and Southeast Asia, and obviously we are at the heart of Southeast Asia and, from there, to connect to the rest of the Maritime Silk Road.

Cooperation on the Belt and Road Initiative is a new highlight of our bilateral cooperation. It has progressed well under the four platforms. I will enumerate them. First, infrastructural connectivity; second, financial connectivity; third, opportunities for third-party collaboration; and fourth, professional services, including legal and judicial cooperation. There will be much work to pursue in the years to come. We will build on this year’s strong momentum to further enhance our bilateral cooperation with China, including at the provincial level, through the latest proposed Singapore-Shanghai Cooperation Council.

Let me now turn to the US.

Our relationship is robust. It spans defence, economic, security, education, scientific and people-to-people spheres. This year, we enjoyed a broad slate of high-level, substantive bilateral exchanges. President Trump was here in June, Vice President Mike Pence last week, and earlier in August, Secretary of State Mike Pompeo. Secretary of Defence James Mattis was here for the Shangri-La Dialogue and National Security Advisor John Bolton was here last week as well. Several Ministers, including me, have visited the US this year to meet our counterparts and engage members of Congress. The Prime Minister has spoken with President Trump on several occasions on the telephone. We have expanded bilateral collaboration in new and emerging areas, such as tax information exchange, cybersecurity, financial technology (fintech), e-commerce, infrastructure development, smart city solutions, advanced manufacturing and robotics, and technology partnerships.

The key takeaway is this. The current Administration may have a different approach to trade, but the fundamentals that undergird our longstanding relationship with the US remain strong. The US remains committed to our region, and we will continue to do more with the US Administration in the years to come.

Let me now turn to multilateral diplomacy.

At the United Nations (UN) General Assembly this year, I spoke about the crisis of confidence in multilateralism and its institutions. But I also made clear that Singapore will double down on our support for multilateralism and the rules-based global world order. In a sense, we have no choice but to subscribe to that because we will always be a small, tiny red dot, and our trade volume is more than twice our gross domestic product (GDP). So, we have no choice but to subscribe and do our best to support multilateralism, a rules-based world order and international trade. Keeping a free and open trading framework and having recourse to third-party dispute resolution mechanisms are essential for a tiny city-state like Singapore.

We have done our bit to help shape international norms on emerging new areas with transboundary impact, for instance, cybersecurity, climate change. And we have thus maintained our advocacy for Singapore's interests in international organisations, such as the UN and the World Trade Organization.

MFA has also been closely supporting the Ministry of Trade and Industry's (MTI's) efforts to advance our agenda of free trade and economic integration. Just last month, the Prime Minister signed the EU-Singapore Free Trade Agreement (FTA), and now we will have to work hard to make sure it is ratified in the European Parliament by May next year. We have also just concluded the 3rd Review of the Agreement between New Zealand and Singapore on a Closer Economic Partnership (ANZSCEP). In fact, the FTA with New Zealand was one of our first-ever bilateral FTA for both of us. So, we now look forward to signing the Singapore-New Zealand Enhanced Partnership (EP) and the upgraded ANZSCEP next year.

We have also launched the MERCOSUR-Singapore FTA negotiations in July this year. For those of you who do not know, MERCOSUR includes Argentina, Brazil, Paraguay and Uruguay. And we are also in the midst of negotiating an FTA with the Pacific Alliance. The Pacific Alliance is Chile, Colombia, Mexico and Peru. MERCOSUR and the Pacific Alliance are significant trading blocs in South America. They represent the fifth and eighth largest economies in the world. We are also having ongoing and encouraging discussions on the Eurasian Economic Union (EAEU)-Singapore FTA. Again, for those who do not know, the EAEU includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. I should make a shout out to Koh Poh Koon, who has been making a lot of trips to that part of the world, which many Members may not be familiar with.

Significantly, Singapore ratified the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP) this year. With a combined market of 500 million people, CPTPP will enter into force on 30 December this year. In fact, if Members cast your minds back to January this year, and if I told you that the TPP minus the US, the remaining 11 partners, would agree to renegotiate and conclude the CPTPP, and that we would ratify and that it would come into force on 30 December 2018, you would have thought I was being completely unrealistic. Nevertheless, this has been achieved. It will produce substantial savings and improve market access for Singapore companies.

We have also played an active and constructive role at APEC and the Group of 20 (G20). I told Members that the Prime Minister just returned last night from Papua New Guinea and we will soon be going to Argentina as well for the G20 meeting. On this trip, I will have to drag along Finance Minister Heng Swee Keat and I must tell Members, for those of you who really want to go, it will take you at least 30 hours to reach Buenos Aires and another 30 hours to come back.

So, in conclusion, Mr Deputy Speaker and Members of this House, we recognise the uncertainty and volatility in today's world. But if we look at what has been achieved this year, we do not need to be pessimistic about its outcome. Even in times of significant geopolitical turbulence, Singapore has built up that very precious asset called "trust". Trusted by our neighbours and by the international community. They trust us because they know we are straight, honest brokers. We are sticklers for international law, a rules-based world order and free trade, and we believe in the sanctity of agreements and contracts. And they also trust our competence to be able to deliver when times are short and the outcomes are urgent and important.

We will continue to be nimble to adapt, seize opportunities and to do our best. MFA will work closely with all other Ministries and agencies to keep our foreign policy balance sheet in good order. What is important – and this is a point I want to re-emphasise – is that foreign policy begins at home and we do need to maintain broad domestic support for our foreign policy. An effective foreign policy rests on this domestic consensus, a consensus built both within this House, and outside this House with fellow Singaporeans. As we commemorate our Bicentennial next year, 2019, I hope Members will continue to work as a whole-of-Nation, to build a safe, secure and prosperous home for all Singaporeans and our neighbours. Thank you all very much. [Applause.]

Thank you, Minister, for sharing the Statement. We have some time for clarifications. Mr Christopher de Souza.

Mr Deputy Speaker, I would like to congratulate the Minister and his Ministry for helping to achieve a successful year with Singapore as ASEAN Chair. Building a rules-based region and bringing our economies closer are key and relevant initiatives.

I would like to ask a supplementary question on the humanitarian aspect. May I ask the Minister what is the Ministry's view on the repatriation of the Rohingyas that has been announced to commence in mid-November 2018 and whether, from the point of view of ASEAN, enough has been done to ensure that those who return will not face the same threats to their safety as when they first left.

Thank you. We are talking about a current and still evolving situation. As I said earlier, the silver lining, having visited both Bangladesh and Myanmar and having spoken to the Prime Minister of Bangladesh and the State Counsellor of Myanmar, is that I can state with a fair amount of confidence that both sides sincerely do want a return of the refugees. The State Counsellor herself has acknowledged that they are residents of Myanmar and that they are entitled to go back. This is a brave position for her to take.

Similarly, Bangladesh, as I said earlier, has done a fantastic job, a really admirable job, in looking after the refugees. But they also know that it is not sustainable and that, at some point, the refugees need to go back. The key point is this. It has to be voluntary, it has to be safe, and it has to be dignified. I cannot give Members a very specific date on which it will actually begin. Because apart from the preparations made by both sides, the refugees themselves have to agree and have to want to go back. Having spoken to some of the refugees, the refugees' key concern is security. Having to risk life and limb to get across to the refugee camps, their question is: will it be safe for me to return? How will my neighbours, the community and the other communities in Rakhine State view their return? They have asked what will be their livelihood? Because, in the end, nobody wants to be a refugee. Everyone wants to get a job, a good job, to be able to support their families. So, the point is that there are many, many details that need to be sorted out.

The other point I would emphasise is that the UN High Commission for Refugees (UNHCR) and the UN Development Programme (UNDP) also have to do their part, both in terms of support and presence on the ground but also in building confidence. We should bear in mind that there are extremists on both sides who do not want this problem to be resolved and do not want the refugees to go back early. Because as long as this problem remains unresolved, it is a festering locus for extremism and for the recruitment of future terrorists. Which, ultimately, threatens not only their immediate neigbourhood but, in fact, threatens us all, across ASEAN.

So, there are a lot more details that need to be sorted out. What I can say now, from my own interactions, is that there is sincere goodwill on the part of both Myanmar and Bangladesh. We need the UN to do more. And, of course, as ASEAN, we will also be willing to step up. And it is ultimately about confidence and trust.

And the domestic lesson for us here is to understand why we are so focused on making sure inter-ethnic and inter-religious relations are looked after so assiduously. Because once those ties, the fabric, is torn, it is very, very difficult to put together again.

Ms Sylvia Lim.

Deputy Speaker, I have one clarification for the Minister concerning our relationship with Indonesia, particularly on the issue of extradition. I believe about a decade ago, the Singapore and Indonesian governments agreed to tie extradition together with some defence cooperation agreements, and, we have noted the Minister's update that we have concluded an ASEAN model Extradition Treaty. So, my question is: how will this model treaty affect our position with Indonesia as far as extradition is concerned? Does it mean that the Singapore Government is prepared to proceed on extradition without it being tied to defence cooperation?

That is a good question, and I thank the Member for asking that. There are actually two separate matters. The Member has been in House long enough to remember that we had actually agreed with Indonesia on two agreements – Defence Cooperation Agreement (DCA) and an Extradition Treaty (ET). They were both signed in the presence of the respective leaders, Prime Minister Lee and President Susilo Bambang Yudhoyono of Indonesia. Those Agreements remain signed but unratified. We will have to wait for the political dynamics within Indonesia as to whether Members are going to see any progress on those two bilateral agreements.

What I referred to was the ASEAN Model Extradition Treaty which, in a sense, forms a starting base to begin negotiations for an ASEAN Extradition Treaty. This will not be bilateral. This will be regional. Being a lawyer, you know that once it becomes regional, the scope and conditions will be quite different from that of a bilateral treaty. So, I would still keep this on two separate channels.

The important point for the ASEAN Extradition Treaty is that we do want to emphasise the importance of rule of law and interoperability within ASEAN. But I would not conflate the two Extradition Treaties, because we are going to keep them separate. The specific terms and conditions will not be the same between the two. As a lawyer, the Member would know, for instance, if you want to extradite someone, you have to show that it is an offence on both sides domestically. Now, if we look at a 10 by 10 extradition treaty, you can imagine the permutations and the lowest common multiple will be quite different from what you would have had in a bilateral Extradition Treaty.

So, I think suffice to say without getting into details, our position is this – there is a bilateral DCA and bilateral ET which were signed and witnessed by our Leaders, but not yet ratified. We will wait and see what happens with that. That, however, does not mean we should not be able to proceed with negotiations for an ASEAN Extradition Treaty on different terms. I want to emphasise that it is on different terms.

Mr Ang Wei Neng.

Deputy Speaker, on the issue of refugees, I am glad that the Minister said that ASEAN countries should step up. Could I ask what kinds of specific help, financial or otherwise, other ASEAN countries, other than Myanmar, have pledged to assist to resolve the crisis? And have any countries agreed to take in some of the Rohingya refugees selectively?

Actually, there has been a global outpouring of support for the refugees. And even from Singapore, I think the Member would be aware that at the grassroots level, at the NGO level, there has been fundraising and there has been support extended to the refugees. We have also extended help directly to the refugees in Bangladesh. For instance, the Republic of Singapore Air Force (RSAF) conveyed a couple of shipments. I believe Senior Minister of State Maliki was there at the handover.

Specifically, within Myanmar itself, when they go back – I myself have not visited Rakhine State – but the reports that I have received were that a lot of the homes and the farms were destroyed. Thay actually need to rebuild homes and a means of livelihood. Right now, for instance, I know India and China are helping with constructing prefabricated homes. But actually, what is important is for the refugees themselves to be able to construct homes of their design and at the standard they are accustomed to.

I know one problem which I have been informed of is that there is a lack of labour within Rakhine State to do rebuilding. Therefore, there has been proposals by the Myanmar government to have a cash-for-work programme so that the refugees will be paid to rebuild and to engage in construction and reconstruction.

There will be needs. There will be appeals. But actually, my sense of the issue right now is that the primary limiting factor is not money. The primary limiting factor is trust – confidence on the part of refugees and trust, and the ground conditions within Rakhine State itself. So, let us wait and see.

But we, as ASEAN, should be prepared to help in whichever way possible. And sometimes just the delivery of humanitarian assistance on the ground and having people on the ground – it is not so much the specifics of what is in the package – but the fact that someone else was there. Someone else was there in goodwill and helping to build trust. This is another point I want to emphasise. You must remember that there are other minorities within Rakhine State. In fact, the indigenous people in Rakhine are the minority in Myanmar. They also need support. They also need to enhance their livelihood. Again, trust requires all communities to be confident and to have a hope that there is a better future. There is a lot more work to be done.

I just wanted to clarify a little bit on the point that Ms Sylvia Lim raised. Let me just get this thing right. The Defence Cooperation Agreement and the Extradition Treaty that we signed with Indonesia – it was signed by both governments. Let me just state for the record: Singapore is prepared to proceed as and when Indonesia ratifies those two agreements. Let me just state that for the record.

Mr Png Eng Huat.

Sir, can the Minister share what major points of contention were removed in the single Draft Negotiation Text of the Code of Conduct in the South China Sea? And in the Minister's opinion, how far is the draft away from being adopted by all the member states?

Let me be very frank with the Member. Yes, it is true we have arrived at a single Draft Negotiating Text. But let me not raise false hopes that all the issues are simple to resolve. For instance, if you speak to the different claimant states, each of them will stand up and loudly proclaim, "Those areas are indisputably mine". In other words, even what is in dispute is disputed. Do Members see my point? "This is indisputably mine." Then another side picks it up and say, "No, this is indisputably mine". You cannot even agree on what areas are in dispute. I am just giving Members an example of a very thorny issue.

Other thorny issues: is this a binding agreement? And then there are enough lawyers here who may quickly then ask: is this a legally binding agreement? And then for those Members who are familiar with international law: even if you get a judgment, how will it be enforced? Who will enforce it? So, I am just trying to give Members a flavour of the enormous challenges which lie ahead.

Nevertheless, China has said that they hope that there will be a first reading of the Negotiating Text next year and they also hope that it can be settled in three years. My own view is that that is a very optimistic scenario. But let us not prejudge the issue. As I said earlier, the fact that patient, meticulous and constructive diplomacy has at least brought us to this point where the waters of the South China Sea are much calmer is still worth noting. It is still a positive step. But do not ever assume it is going to be an easy or short journey.

Mr Vikram Nair.

I thank the Minister for the comprehensive view of MFA's work. It is important for us to stand up for multilateralism at a time when nationalism is on the rise everywhere. The question I have relates to some of the issues that arose from the SingHealth enquiry. Do we still have to worry about foreign interference in our local politics? And if so, what could be the best steps our people could take to prepare to deal with that?

The short answer is yes. The Member's second question was what steps we need to take. The first point is public education and people need to be aware that we will always be a target for campaigns and misinformation campaigns and deliberate online falsehoods. So, the first thing is to be aware of it. The second point is to be sceptical of what you receive through all your social media feeds. I remember this very good piece of advice that our former President Dr Tony Tan gave. He said when you receive a message, ask who it is from; second, ask who it will benefit and, of course, ask if it is accurate or not. I do not want to prejudge other issues which will be brought to this House. But let us get real. There will always be the danger of foreign interference. You will have to take it almost as standard statecraft of the digital age. And if you assume everyone is going to act with restraint, it will be very foolish.

Mr Louis Ng.

I would like to join my fellow Members to thank the Minister and MFA especially, for all the work they have done to try and resolve the crisis in Rakhine State and in Bangladesh as well. I have three supplementary questions. One, I previously asked the Minister whether Singapore will be sending a second consignment of humanitarian aid to the Rohingya refugees in Bangladesh and the Minister at that point, replied that it is pending further assessment. Now that he has been to the refugee camps, could I ask for an update on whether we will be sending these humanitarian supplies?

The second is on the repatriation, which I agree should happen. But I am wondering whether once they are back in Rakhine state, whether there are plans to grant them citizenship. Because as the Minister mentioned, we have to address the root causes, and one of the root causes of why they fled and resulted in this crisis is because they did not have citizenship.

And the third is in the repatriation process, whether there will be UN peacekeepers on site. I think that was one of the requests of the refugees, to ensure that this repatriation is both safe and secure for them.

They are three interesting supplementary questions. On further consignments of aid, yes, we are prepared to, but I would consider targeting the aid to the refugees when they return. What I saw in the refugee camps in Cox's Bazar – I know the Member was there, but he was there earlier last year – and according to the people on site, there is a vast difference now. The conditions the refugees are living now are much much better than when they first arrived. You know, I used to be the former Environment Minister, so I notice things like drains, latrines, water supply, food supply, cooking gas and energy, and actually there has been a lot of work that has been done, especially on the Bangladesh side of it. My greater concern will be when they return – the rebuilding programme and, ultimately, their livelihoods and making a living.

I really do not want to get into the issue of citizenship because that is not for us, the Parliament of Singapore, to be debating or to decide on behalf of Myanmar. This is something which they have to sort out through their own political processes.

Similarly, this issue of UN peacekeepers is a sovereign issue that has to be sorted out by Myanmar and, if I were Myanmar, I would be offended if a Parliament elsewhere were making pronouncements on such issues. So, with your permission, I am not going to get into those two specific issues. Always think about how we, in Singapore, would view others pontificating or prescribing how we should solve our own political problems.

I will allow one last question. Mr Liang Eng Hwa.

Thank you, Sir. I would like to join Members to congratulate the Foreign Affairs Minister for a successful 2018 in terms of foreign relations and putting Singapore on the world map. If I may add on another achievement for 2018, it is also Singapore Parliament hosting the ASEAN Inter-Parliamentary Assembly (AIPA), where we had the opportunity to discuss many issues, like deepening regional economic integration, and also meet with many new Members of Parliament, including those from Malaysia.

My question is on RCEP. I would like to ask the Minister whether he sees the prospect of RCEP concluding next year? And whether during the ASEAN Leaders Summit, does the Minister sense the political will to conclude the RCEP? And what could be the obstacles there? And the final point is to assure the Minister that as he represents Singapore in the various places, including Argentina, his Group Representation Constituency Members of Parliament stand ready to cover his duties when he is not around.

Thank you for covering my numerous absences. I must tell Members I travel almost as much as a cabin crew. I calculated, I took about 36 visits a year, so I thank you for your personal support. Actually, I should start off with an apology to the House for not mentioning AIPA meetings which the Member has hosted, and Speaker has chaired. That has been very important and useful. It has also been particularly eye-opening for the younger Members of Parliament to meet your counterparts from other ASEAN states and, more importantly, to see how these issues can paralyse us, can divide us and how difficult it is. I mean there were some resolutions that you cannot even get onto the agenda, much less agree on a resolution. So, I apologise for not mentioning this. I should have. But I want to congratulate and thank all Members who did participate in AIPA, and I encourage you to continue participating as it moves on to other destinations as well.

On RCEP, the statement was very carefully crafted. We reported substantial progress on the negotiations for RCEP, in other words, not yet ready to declare conclusion. There are a couple of both negotiating as well as political considerations which have led to the current position where we can report substantial progress but not yet conclusion. On the Member's question as to what are the chances of it being done next year, well, based on the Leaders' pronouncement last week, all of them indicated their support for it to be concluded in early 2019. On the Member's next question are there potential derailers, of course, there are potential derailers, including the fact that there are several elections next year. I am not referring to Singapore.

Thank you, Minister. I just want to add that the performance by the Singapore Members of Parliament during AIPA, led by Deputy Speaker Mr Charles Chong and the team of Members of Parliament, was very impressive. [Applause.]

Order. End of Ministerial Statement. Introduction of Government Bills.

[(proc text) "to provide for the licensing and regulation of payment service providers, the oversight of payment systems, and connected matters, to repeal the Money-changing and Remittance Businesses Act (Chapter 187 of the 2008 Revised Edition) and the Payment Systems (Oversight) Act (Chapter 222A of the 2007 Revised Edition), and to make consequential and related amendments to certain other Acts", (proc text)]

[(proc text) presented by the Minister for Education (Mr Ong Ye Kung) 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 amend the Merchant Shipping (Maritime Labour Convention) Act 2014 (Act 6 of 2014) and the Merchant Shipping Act (Chapter 179 of the 1996 Revised Edition) to implement the International Convention on Salvage, 1989, and amendments to other maritime conventions, to make miscellaneous amendments relating to merchant shipping, and to make related amendments to the Maritime Conventions Act, 1911 (2004 Revised Edition)", (proc text)]

[(proc text) presented by the Senior Minister of State for Transport (Dr Lam Pin Min) 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 amend the Chemical Weapons (Prohibition) Act (Chapter 37B of the 2001 Revised Edition", (proc text)]

[(proc text) presented by the Minister for Foreign Affairs (Dr Vivian Balakrishnan) 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 amend the Misuse of Drugs Act (Chapter 185 of the 2008 Revised Edition)", (proc text)]

[(proc text) presented by the Second Minister for Home Affairs (Mrs Josephine Teo) 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 amend the Infectious Diseases Act (Chapter 137 of the 2003 Revised Edition)", (proc text)]

[(proc text) presented by the Minister for Health (Mr Gan Kim Yong) read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]

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

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

Sir, Singapore has come a long way since we debated whether to build our first Mass Rapid Transit (MRT) line many years ago. We are in a much stronger fiscal position today. However, building a new line remains a major decision due to the large upfront capital outlay involved. For example, the construction of the Downtown Line cost $21 billion, or close to 5% of our gross domestic product (GDP) in 2017. This escalation in costs over time is not just due to inflation, but also because we are now building under more challenging conditions, for example, deeper MRT tunnels and stations amidst our increasingly built-up environment.

Although the development costs are hefty, the benefits extend over many generations of Singaporeans. We should be responsible and set aside funds to invest in our rail network for the benefit of future generations.

This is why the Government announced the Rail Infrastructure Fund (RIF) earlier this year at Budget 2018. The RIF will enable the Government to save up when our fiscal position allows. This will smoothen out the large capital outlay for rail projects.

In line with this, the Ministry of Transport (MOT) proposes to enact the Land Transport Authority (LTA) (Amendment) Bill to formalise the establishment of the RIF. Let me now explain the key provisions in this Bill.

As the developer of the rail network in Singapore, LTA is well-placed to hold, manage and administer the RIF. Clauses 4 and 6 of the Bill establish the RIF as a Statutory Fund under LTA and assign the function of managing the RIF to LTA.

Clause 6 further sets out the sources of money for the RIF. This enables the Government to set aside money from the Consolidated Fund or Development Fund for the RIF through Supply Law.

Clause 6 also defines the purposes for which LTA is empowered to withdraw moneys from the RIF. Essentially, this ensures that the RIF is only used for the development of the MRT and Light Rail Transit (LRT) network. The key uses of the RIF are as follows.

First, to expand the MRT and LRT network. This includes constructing rail infrastructure, such as stations, tunnels and tracks; acquiring the first set of operating assets, such as trains; performing investigative studies; as well as associated costs, such as the cost of land. The RIF may also be used to replace existing operating assets, if such replacement is required to operate the expanded rail network. For example, when we build rail extensions that connect to existing lines, operating assets on the existing lines may need to be replaced to allow both sections to interface properly.

Second, to replace, upgrade and add rail infrastructure, such as tunnels and tracks, for existing rail lines. The development of a rail line does not end after it is constructed. We will need to continually invest in the upgrading and renewal of the rail civil infrastructure as they age, to ensure safe and reliable operations. These renewal works will similarly require large capital outlays. It is prudent for us to put aside money in anticipation of such spending.

Third, to invest in accordance with the standard power of investment for Statutory Boards. This is to enable the RIF to keep up with inflation. The investments made using the RIF moneys will be held within the RIF, to ensure that the proceeds continue to be ringfenced for the development of the MRT and LRT network.

Currently, the moneys in the Railway Sinking Fund (RSF), which is another Statutory Fund under LTA, may also be used to acquire operating assets. Clause 5 distinguishes the use of the RIF from the RSF. The RIF is intended for the expansion of the rail network and the acquisition of the first set of operating assets necessary to enable this expansion. On the other hand, the RSF is intended for the renewal of rail operating assets, such as trains. While the RIF is solely made up of Government subsidies, the RSF comprises a mix of Government subsidies and Licence Charge collected from the rail operators under the New Rail Financing Framework. This distinction reflects the allocation of financial responsibility between taxpayers and commuters – tax dollars will be used to invest in the civil infrastructure and the first set of operating assets. Thereafter, every generation of commuters will need to pay part of the recurrent cost of operating the rail network, including the renewal of operating assets. This ensures that the burden on taxpayers remains sustainable.

Sir, the RIF will allow us to save up and reinvest in our future, to benefit generations of Singaporeans to come. With that, Mr Deputy Speaker, I beg to move.

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

Mr Darryl David.

Mr Deputy Speaker, Sir, the MRT and LRT networks are vital transportation arteries that residents of Singapore rely on. Based on statistics released by LTA in 2017, the average combined daily ridership on our rail MRT and LRT networks is approximately 3.3 million per day. This represents a sizeable proportion of daily commute on our public transportation system, and these numbers are expected to rise in the near future when our total rail capacity is further expanded with the opening of new train lines.

Since 2016, train operators have gradually transferred their rail assets to the Government under the New Rail Financing Framework (NRFF). The NRFF is meant to create a more reliable system where maintenance regimes of train operators are regulated by the enhanced Maintenance Performance Standards.

In principle, the NRFF should have a positive impact on rail reliability since it increases the onus of preventative maintenance on the network operators. Yet, there have been several high-profile train disruptions in 2017, such as the flooding of the MRT tunnel in Bishan, the Joo Koon train collision, and a series of incidents that affected three train lines on the same day in November 2017.

These incidents do not seem to gel with the pledge that the Singapore MRT (SMRT) and LTA made in July 2016 that they would increase the headcount of maintenance and engineering staff to meet the enhanced standards. In this regard, I hope that MOT could give the House perhaps an update on whether SMRT and LTA are on track to increase their maintenance capacity, how the Ministry is holding SMRT and LTA responsible for adhering to the Maintenance Performance Standards, and perhaps the consequences they face for not doing so.

The NRFF also introduced a new framework to enhance the financial sustainability of the network – train operators will now pay a licence charge into an RSF that can be used to build, replace or upgrade operating assets. It was subsequently announced in the 2018 Budget that the Government will inject $5 billion into the RIF that the Minister spoke on earlier.

In principle, RIF is meant to allow the Government to save when the fiscal position allows, so as to finance the development of new rail lines and to renew and upgrade existing rail infrastructure. I hope that the Minister can provide clarification on the financing model of the RIF to meet future needs beyond the initial capital injection of $5 billion. I would also like to inquire if the Ministry has developed a set of financing guidelines for the fund and whether it will be making these guidelines known.

The topic of public transport, Sir, is not just a critical one, but it also somewhat an emotive one because it affects everyone in one way or another. While Singapore continues to upgrade and enhance our rail and network system, we need to build in a rubric of checks and balances to ensure that our investments are reaping due returns in the form of enhanced performance and reliability. Has the Government then predetermined a set of expenditure-performance ratios to measure the returns of capital expenditure from the RIF vis-à-vis the expected improvement in train reliability and performance?

Aside from setting up the expenditure-performance ratio, has a set of asset replacement guidelines been drawn up to ensure that capital equipment is replaced or bought before the need to do so becomes pressing? For example, lifts in public housing estates are generally replaced when they hit the 28-year mark or thereabouts. What is the lifespan of rail assets before they are being replaced and how is the operational lifespan of these assets determined?

Mr Deputy Speaker, Sir, the coming decade will see several big ticket expenditures in our public transport. While we are setting aside the RIF to fund current expenditure, I think it is also good that the RIF will form one of the foundational pillars to ensure that we have a reliable public transport system to meet future capacity. With that, Sir, I end my speech in support of the Bill.

Assoc Prof Walter Theseira.

Mr Deputy Speaker, Sir, thank you for the opportunity to speak in this debate.

The costs for rail infrastructure development have risen sharply over the years. In a speech that the Minister for Transport gave on 13 November 2017, he noted that the North-South Line costs about $160 million per kilometre (km), while the Downtown Line costs about $490 million per km to build.

Inflation aside, the real costs for rail development will continue to rise because our rail development now takes place in a highly built-up environment. And as our rail network grows, we will always be renewing some part of the system which will also be costly.

So, in this light, the RIF is a timely move. We want to avoid raising taxes substantially or borrowing at perhaps unfavourable rates when the time comes to make these investments. Provided that the Government can commit to prudently setting aside this money, the RIF will help us to finance these important infrastructure developments at the lowest possible cost. It is a move that makes our transport finances future-ready.

However, there are also other challenges involved in ensuring that our transport system is future-ready. Sir, the Government has planned for Singapore's MRT network to reach 360 km long by 2030. This is nearly double that of the present network. The RIF will provide us the financial capability to pay for these important investments, but we must also have the human resource capability to operate and maintain the systems and we must have the public support that commuters and taxpayers alike are willing to pay for the upkeep of the system.

Let me first touch on the human resource factors. Sir, our rail engineers and transport workers perform a highly skilled and often thankless job under demanding conditions. In 2017, SMRT announced that they were on track to increase their engineering staff strength to 700 engineers by 2020. This followed a 2012 review by SMRT that identified a need to triple the engineering strength to handle the maintenance, renewal and operations of future MRT lines.

Now, tripling your engineering staff strength in just a few years means that the majority of our rail engineers today are relative newcomers in the field. Sir, I do not doubt the training, integrity and commitment of our rail engineers. But experience and expertise do take time to develop, and the question is why was the engineering strength in our core public transport operators allowed to remain at levels that are manifestly inadequate to the task?

Let me suggest some reasons. Under the old financing model for public transport, operators had to survive based on profits from the very narrow margin between fare revenue and operating costs. Since there is little that our operators can do to raise the fare revenue side of the box, they had to keep costs down. Maintenance and operations are cost centres, so the pressure naturally fell on engineering to do more and more with less and less.

Sir, this was efficient from a narrow point of view. The old public transport financing model was designed to push operators to minimise costs and, hence, to minimise the fare burden on the public. And because of that, we paid relatively little to operate a world-class transport system while the system was new. But we ended up paying for it later through deferred maintenance and poor reliability. And, today, our rail operators are also paying the price. SMRT trains lost $86 million in the financial year (FY) 2018 because fare revenue simply does not match the operating expenditure required to provide a high-quality, reliable system. It is not hard to see the danger in this.

Sir, it is important that the Government put the financial model for our train operators on a path for long-term stability and sustainability. The Government has already done so with the Bus Contracting Model for our bus operators. A similar contracting model that mitigates fare revenue risks for rail operators, that also gets value for money through competition or benchmarking, may be needed for the rail sector. It is not about rescuing shareholders or private companies. It is about ensuring that our rail operators and their core engineering capabilities have the resources needed to thrive. Of course, we must ensure there are incentives to remain efficient. But the financial model needs long-term stability. A young talented Singaporean must see rail engineering as a viable long-term career where they can make a real difference. With support from the right Government financial and training framework, our public transport operators can build the human resource capabilities for our future rail system needs.

Now, let me touch on the issue of public support for these investments. Planning for our original MRT system took place in the public eye. Early studies began in the 1960s. The final decision to proceed with a rail-based system was only made in 1982. The high costs of a rail-based system, versus an all-bus system, were the sticking point. I think we are all glad that the Government made the decision to invest in the MRT. But the point is that the public was aware of, and publicly debated, these decisions to spend billions of dollars on rail infrastructure.

Today, I am concerned that we lack a similar level of public engagement and shared responsibility for decision-making in the transport system. The Senior Minister of State for Transport is now chairing the Land Transport Master Plan 2040 public consultation exercise. This is excellent. But I would suggest that we go beyond current efforts. We must continue to involve the public as a co-creator of decisions made in public transport, ranging from investing in MRT lines, to determining the quality of service offered. These decisions have cost implications and the public is ultimately paying the bill.

This question of public support for our transport system has often been framed as one of commuter satisfaction. But I think that is a narrow definition. If you put huge subsidies into the system and you greatly improve quality, as the Government has done in recent years, then, of course, the commuter will be satisfied, or at least more satisfied. The taxpayer may not be. But the problem is that today, the commuter may be satisfied without having any idea of the real costs and tradeoffs involved in providing a world-class transport system.

Sir, in FY2018, LTA spent $1.5 billion dollars on bus service fees and collected only $831 million dollars in fare revenue. For rail, the Minister for Transport said in the Committee of Supply debate this year that $4 billion will be spent to renew the rail system over the next five years. Meanwhile, a Nanyang Technological University (NTU) study, commissioned by the Public Transport Council, found that our fares were the second lowest among 12 major cities worldwide. Commuters may not realise that their fares are low, because they are only asked to pay today for a relatively small part of the operating costs.

I think the Government must set out a clear long-term vision of how commuters will contribute to the longer-term funding and investment decisions for public transport. The Public Transport Council’s introduction of the Network Capacity Factor, which links fares to the relative supply and demand for public transport services, is a good first step. It means that when the public enjoys better connectivity and less crowded rides, they share in the costs of providing these services. But now that the public pays part of these system costs, they must also have a way to say when they have had enough. We do not want to force people to buy business class tickets when what they really want is economy – or premium economy. There are no market forces that would allow commuters to tell us what is the right mix of quality and price in public transport. So, the Government has to do more to engage the public to discover this.

Sir, I strongly support the Bill. It places the Government on a firm financial footing to continue to provide a world-class public transport system. I hope the Government can assure us that, in addition to financial capacity building, equally strong measures will be taken to build human resource capabilities and public engagement and support for our public transport system.

Mr Henry Kwek.

Mr Deputy Speaker, the amendments in the LTA Bill will strengthen the governance surrounding investments and maintenance of our rail lines. Therefore, I rise in support of the Bill.

Before I start, on behalf of my residents who use the North-South (N-S) Line, I would like to thank MOT, our MRT workers, as well as those involved with the N-S Line upgrade for their countless hours of hard work. After the completion of the resignalling project, the reliability of the line has improved. So, thank you.

I would like to raise three points today.

First, can LTA share how we determine on the lifespan of the key assets and system? If we draw on the lessons over the last decade or so, the key issue is how do we ensure timely upgrades, as well as preventive maintenance. Does LTA determine this lifespan through international benchmarks or through LTA's internal assessment working with engineering consultancy companies?

If LTA relies on international benchmarks, can LTA share which country and which system did we use? And when we localise those benchmarks for use locally, do we account for Singapore-specific conditions, such as our heat and humidity levels?

Secondly, I would like to request that LTA communicate to our people the true cost of the MRT system per trip. With that, I strongly agree with the previous Member's view that our people will need to understand, not just the quality of service, but how much it costs them. In the long run, our spending depends on our citizens' needs and expectations. So, our citizens need to know the true cost of service provision, even though we continue to ensure that fares, after subsidies, remain affordable to the broader public.

For example, in our medical bills, we reflect the true cost, and then we reflect the subsidies, before arriving at the amount that Singaporeans have to pay. That is a good approach to keeping Singaporeans informed. As such, from time to time, through various channels, including on the MRT station platforms and trains, we should communicate to our people the true cost of our MRT networks per trip. This cost should include components, such as infrastructure investment cost as well as total operating cost. This is important information for our citizens and, I suspect, will shape our discussions in our Chamber over time. I hope we cannot just talk about satisfaction levels, but also whether or not, like the previous Member said, are we overconsuming or under-consuming transportation resources.

My final point is a technical one. In clause 6(a), can I check how LTA will ensure that the expenses are charged accurately in the RSF and/or RIF since "demolition and replacement" expenses could be for both funds? I assume that the Sinking Fund is for existing lines and the Infrastructure Fund is for new lines. Demolition and replacement expenses of any rail line is likely to be a major expenditure. When will LTA charge these under the Sinking Fund and when will it do so under the Infrastructure Fund?

Notwithstanding my few queries, I support the amendment Bill.

Senior Minister of State Janil Puthucheary.

Mr Deputy Speaker, I thank the Members Assoc Prof Walter Theseira, Mr Henry Kwek and Mr Darryl David for their questions and suggestions.

Our land transport system is becoming more complex, and commuters have increasingly diverse travel needs and preferences. We have land limitations and fiscal constraints. We need to make difficult tradeoffs in deciding how to plan and develop our land transport network.

I agree with Assoc Prof Walter Theseira that the Government needs to engage the public when planning and developing our land transport system to develop public support and to ensure the land transport system continues to be designed with commuters in mind. This is why we have embarked on an extensive public consultation exercise, as part of developing the Land Transport Master Plan (LTMP) for 2040. Over the last two months, many Singaporeans have shared their concerns and aspirations. Some have participated in our Focus Group Discussions and LTA is gaining valuable feedback through this process. LTA is also taking the opportunity to share its planning considerations and tradeoffs. Please continue to come forward and participate through the LTMP consultation process so that, together, through partnership, we do achieve the best possible outcomes.

Mr Henry Kwek suggested that LTA communicate the true cost of providing MRT services so that citizens understand the financial tradeoffs. We are not able to issue receipts for each ride, so we use other ways to communicate the cost and subsidies. Over the next five years, the Government is subsidising $5 billion for bus services, $4 billion for renewal of rail operating assets and $20 billion to expand our rail infrastructure. We will continue to communicate to commuters the cost of providing public transport services.

Mr Henry Kwek and Mr Darryl David asked about the differences between the RIF and RSF.

The RSF is not permitted by section 13A of the LTA of Singapore Act to fund the "demolition and replacement" of rail infrastructure, such as tracks and tunnels. Instead, the RSF is to be used to acquire operating assets, such as trains and signalling systems, to replace or upgrade ageing ones for existing rail lines.

On the other hand, the RIF is, by this Bill, to be used to expand and renew our domestic rail infrastructure, such as tracks and tunnels. This includes associated works and investments. Beyond the injection of $5 billion in FY2018, the RIF can be topped up in future years when the fiscal position allows.

LTA integrates our transport plan closely with the land use plan and builds new rail lines only when there is a strong use case. This good planning and financial principle does not change with the introduction of RIF. The RIF simply provides the Government with the flexibility to save up, when our fiscal position allows, in anticipation of lumpy capital rail investments in future.

Mr Henry Kwek and Mr Darryl David also asked how LTA determines when to replace and upgrade key assets and systems in a timely manner. LTA determines the replacement schedule of our rail assets based on the asset design life and the specific asset’s actual condition. This is to take into account variance in lifespan under Singapore’s operating environment, as Mr Kwek correctly noted. Where necessary, LTA also engages engineering experts to provide third-party opinions. Going forward, LTA is developing the Rail Enterprise Asset Management System, which will integrate asset information and maintenance records across the different systems, so that the health of the various operating assets can be monitored holistically over their respective lifecycles. The system will be equipped with data analytics capabilities to monitor asset performance and identify potential faults before they occur, so that these assets can be repaired or renewed pre-emptively. This shift towards data-driven predictive maintenance and asset renewal will enable sustained rail reliability, while optimising overall lifecycle costs.

Mr Darryl David asked whether SMRT and LTA have sufficient maintenance capacity to achieve high rail reliability. Assoc Prof Walter Theseira made some remarks and asked some questions about human capital development. Mr Deputy Speaker, I note that these questions do not relate to the contents of this Bill but I will take the opportunity to make a few short remarks.

I want to assure this House that MOT, LTA and our rail operators are working hard to raise rail reliability. SMRT has already raised its maintenance headcount by more than 700, as has been noted by Assoc Prof Walter Theseira, since its transition to the New Rail Financing Framework. Assoc Prof Theseira also correctly noted that it takes time to train and groom our engineers. To attract, develop and retain skilled engineers and technicians for the land transport sector, we are professionalising the rail engineering vocation and have seeded a $12.5 million Public Transport Manpower Development Fund to drive manpower development initiatives. We are also partnering our institutes of higher learning and centralised academies, such as the Singapore Rail Academy, to roll out workforce development programmes.

But maintenance capability is not only about manpower. It is also about giving our engineers and technicians sufficient engineering hours to carry out these maintenance and asset renewal works. This is why we introduced Early Closures and Late Openings (ECLO) last December.

These efforts are starting to pay off. We have turned the corner. Last year, the Mean Kilometres Between Failure (MKBF) for our MRT network was 181,000 train-km. This has tripled to 661,000 train-km for the first three quarters of this year. This is not just a numbers game. The commuters have felt the improvement and I thank Mr Henry Kwek for his comments. His residents have given him good feedback about the reliability of the N-S Line. As the new signalling system for the East-West (E-W) Line stabilises, residents living in the East and West will also begin to enjoy better rail reliability.

Instead of a complex expenditure-performance ratio, the Minister for Transport has laid out a very clear objective target for rail reliability – to achieve one million MKBF for the MRT network by 2020 and sustain it at that level going forward. This is a bold target and very few metro systems around the world have consistently achieved this. MOT, LTA and our operators will continue to work hard to bring commuters safe, reliable and affordable public transport services.

Assoc Prof Theseira observed that we need a framework that allows our rail operators to be financially sustainable. This is so that they can continue to attract engineers to join the industry and to invest to sustain high rail reliability. LTA has just completed transitioning all rail lines to the New Rail Financing Framework this year. Under this model, the Government co-shares the fare revenue risk with the operators. This is a big step towards building financial sustainability that Assoc Prof Theseira spoke about. We will need to evolve our financing model to continue to adapt to the changing operating environment. The Government will continue to review our financing framework periodically to ensure the public transport system continues to serve us well.

Mr Deputy Speaker, Sir, the idea to build an MRT network was discussed in 1967, just two years after Singapore became independent. This was contentious at the time. It would be one of the most expensive infrastructure projects for our young nation. After 15 years of careful study, the Government committed in 1982 to build the N-S and E-W Lines at a price of $5 billion, close to 15% of Singapore’s GDP at the time. It was a difficult decision but the right one. When these lines started operations in 1987, they opened up new possibilities for Singaporeans to live, work and play.

We have since expanded the rail network considerably. By 2030, with the addition of the Jurong Region Line and Cross-Island Line, we will have a total of eight MRT lines. The improved connectivity brought about by our rail network has allowed us to develop new economic centres and key facilities across our island. The implementation and success of Punggol Digital District, Changi Business Park, Changi Airport, Tuas industrial estate and Jurong Lake District, would not be possible without the enhanced connectivity brought about by the rail network.

The rail system is an economic project and a social leveller. As Mr Darryl David pointed out, Singaporeans depend on the MRT and LRT – 3.5 million trips are made on the rail network every day, bringing Singaporeans to school, work and back home.

Today, this rail network has grown to become the backbone of our public transport system. Because of the foresight of the previous generation, our economic opportunities have expanded and our island home is now more connected. In setting up the RIF, we are following in their footsteps and planning for the future of the next generation. With that, Mr Deputy 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. – [Dr Janil Puthucheary.] (proc text)]

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

Order. I propose to take a break now. I suspend the Sitting and will take the Chair again at 3.30 pm.

Sitting accordingly suspended

at 3.06 pm until 3.30 pm.

Sitting resumed at 3.30 pm

[Deputy Speaker (Mr Charles Chong) in the Chair]

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

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

Sir, access to justice is an important cornerstone of our society. The Government has strengthened our systems over the years to enhance access to justice for Singapore Citizens and Permanent Residents (PRs). This includes working with the Judiciary to enhance and improve Court processes to save time and costs and enhancing frameworks to enable Singaporeans to resolve their disputes quickly in a cost-effective manner, such as through the use of mediation.

Even with various Government-driven initiatives to reduce the costs of dispute resolution, we recognise that some in our society may still be unable to afford their own lawyers for basic legal services. Providing access to justice to persons of limited means underpins the Legal Aid and Advice Act, and the establishment of the Legal Aid Bureau (LAB).

To ensure that public funds are properly allocated to the most vulnerable persons who have reasonable grounds for legal proceedings they wish to pursue, the Act currently has a two-fold test for legal aid. First, applicants must satisfy the means criteria based on the applicants’ disposable income and disposable capital. Second, applicants must then pass a merits test.

The Government regularly reviews the Act to ensure that the Act remains able to meet the objectives that I have just set out. This Bill arises from our latest review.

The Bill does three things: first, it provides for the means criteria to be set out in subsidiary legislation; second, it provides for greater flexibility for aid to be given to those who might fail the means criteria; and third, it improves the administration of legal aid.

A significant clause of the Bill is clause 7(a), which provides for means criteria to be set out in subsidiary legislation instead of the Act. This facilitates the modification and simplification of the means criteria.

Currently, the means criteria involve an assessment of disposable income and disposable capital. Disposable income is calculated by taking the total income of the applicant and his or her spouse and deducting various permitted deductibles, such as living allowances and Central Provident Fund (CPF) contributions. Disposable capital is calculated by taking the value of the property which an applicant possesses or is entitled to and deducting various permitted deductibles, such as a Housing and Development Board (HDB) flat owned and used by the applicant and his family as their home.

These criteria have worked well to identify those who have a real need for legal aid. Nevertheless, some changes to the means criteria may better serve the most vulnerable in the future.

The Bill will allow us to provide for means criteria to be set out in subsidiary legislation, and we intend to simplify the means criteria, without compromising on its effectiveness at identifying the truly needy.

The revised means criteria will be aligned with those more commonly used by current social support schemes, and reference indicators, such as (a) the per capita household income (PCHI), and (b) the annual value (AV) of the applicant’s place of residence, and his savings and investments.

The new means criteria will involve assessing the applicant's gross income and assets, instead of his disposable income and disposable capital. This also simplifies the application process for legal aid. Applicants will no longer need to provide various documentary proof of deductibles and, in setting the new PCHI limits, we intend to incorporate most of the permitted deductibles within the current means criteria to minimise the risk that applicants could be disadvantaged by the switch over from disposable income to gross income.

We will set out the qualifying limits for the new means criteria in subsidiary legislation next year, to account for the 2018, or the latest, income data. The new means criteria will be set such that there will be no material impact on the number of households which will remain eligible for legal aid.

We will continue to regularly monitor and review the new means criteria after implementation to ensure that legal aid remains available to persons of limited means.

Other than simplifying the means criteria, the Bill also provides greater flexibility for legal aid to be given where it is just and proper to do so, for example, to those who may find themselves in extenuating circumstances. This can be found in clause 7(b) of the Bill.

Currently, the Act only allows for a limited deviation from the means criteria. To illustrate, the Director of Legal Aid may disregard certain matters in determining the disposable income and disposable capital of an applicant in four specific circumstances defined in the Second Schedule. Those circumstances can be broadly summarised as follows:

One, where the applicant lives apart from his or her spouse.

Two, where the applicant has a sudden physical or mental disability.

Three, where the applicant has a sudden loss of income.

And four, where the applicant is involved in certain family proceedings involving children, or protection orders between spouses or ex-spouses.

In computing the applicant’s disposable income or disposable capital, the Director may: (a) grant such applicants additional deductibles; or (b) exclude the income of the applicant’s spouse.

However, the Act restricts how much the Director can do in these situations. It also does not allow the means criteria to be adjusted for other applicants who might otherwise fail the means criteria but do not fall within any of those four categories.

We understand that applicants may sometimes need more help. Applicants with other circumstances not currently prescribed in the Act may also face other strains on their financial resources and they may not be able to afford legal fees. For example, LAB currently is unable to help an applicant who fails the means criteria but cannot afford legal services because he has a sudden serious illness and has to pay for major medical procedures.

The Bill will provide greater flexibility for LAB to assist these applicants. Clause 7(b) allows the Minister to direct the Director to issue a Grant of Aid to an applicant who does not satisfy the means criteria, if the Minister is of the opinion that it is just and proper that legal aid be granted to this applicant. The Minister may also authorise any person, including a panel of persons, to exercise this power.

The remainder of the Bill makes general improvements to the administration of legal aid, and I will run through a few of the more significant provisions.

Clause 3 empowers the Director to appoint public officers to assist the Director, the Deputy Director or the Assistant Director of Legal Aid. Some of the appointed public officers will be specially-trained Legal Executives. These "Specialist Legal Executives" will be authorised to provide legal advice to applicants and may also appear in Court for certain matters, such as uncontested divorces. They will first undergo rigorous and specialised training for this purpose.

Clause 7(a) also empowers the Director to decide on the merits test in certain proceedings, instead of referring the matter to a board which comprises the Director and no fewer than two solicitors. This is to streamline the merits test process for what could be straightforward cases, such as uncontested divorce cases where the parties have agreed on all related or ancillary matters.

Clause 10 amends the Act to allow aided persons to obtain additional Court documents free of charge. Currently, they may only obtain a copy of the judge's Notes of Evidence free of charge. The additional documents, such as Grounds of Decision or certified transcripts in relation to proceedings for which legal aid is granted, will be set out in the subsidiary legislation.

Clause 17 re-enacts the existing section 9 as a new section 22A, to clarify that the Director has the power to require contributions for legal advice cases. At present, it is envisaged that contributions may have to be paid where legal advice and assistance in preparing certain legal documents is requested. We do not intend to charge a contribution for applicants who have received only oral legal advice, as is the current practice.

Mr Deputy Speaker, in conclusion, the Bill builds on the good work of LAB, supported by the legal fraternity and our key partner agencies, to continue enhancing access to justice. It facilitates the simplification of the means criteria for applicants, provides more flexibility for legal aid to be granted where just and proper, and overall improves on the administration of legal aid.

The Bill reaffirms the Government’s commitment to ensure access to justice for the most vulnerable, and I trust these changes will also enhance LAB’s ability to do its work in the many years to come. Mr Deputy Speaker, Sir, I beg to move.

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

Mr Christopher de Souza.

Sir, this Bill strengthens access to justice in Singapore. Often times, a person may feel daunted by the prospect of needing to navigate the legal process on one’s own. Some knowledge of the law may be needed to make legal arguments in Court. Some may not be able to afford Court fees, let alone hire legal assistance, aid or representation. For justice to be administered, the best institutional and legal infrastructure is necessary but insufficient; access to them is also important. At this juncture, I should declare that I am a lawyer in private practice.

Access to justice is important, not just for justice between relevant parties, but is also critical for society, a rule of law society, a society where people obey the law and are guided by the law.

As an example, if an employer knew that he or she can get away with not paying the employee's wages agreed upon in the contract because the employee is unable to bring a claim against him or her, it would be much easier for an employer to unlawfully withhold wages. But this would not be the case if the employer knew the employee has access to justice. Therefore, by knowing that there is a possibility that the Court system may be utilised to enforce the claim, there will be greater incentive to obey the law. In this way, access to justice promotes the rule of law, even before something goes wrong.

Furthermore, in certain circumstances, when something goes wrong, access to justice is important for people to not feel that they need to take things into their own hands by resorting to violence, for instance. A tangible example of this is personal protection orders, one of the many things that LAB helps its clients with.

Through this Bill, LAB will be even more effective in its mission of advancing access to justice and the rule of law. I should also state that many members of the Singapore Bar already provide hours upon hours of pro bono services to clients who cannot afford legal fees. So, these amendments in this Bill should be viewed as complementing the already selfless effort of many members of the litigation Bar.

Coming back to the Bill, clauses 7 and 21 remove the current means test in the Second Schedule of the current Act. Currently, the merit test comprises the disposable income test and disposable capital test. The amendment allows the means test to be brought in line with what is currently used among other agencies and welfare services. This simplifies the process and makes it easier for applicants who need various forms of help to use the same supporting documents to apply for the different kinds of help. Related to this, would the Senior Minister of State elaborate on how the qualifying limit will be set?

On a related note, there is an increased discretion for the Minister to direct the Director to accept deserving cases should the applicant not meet the rigid means test. The broadened discretion expands the discretion beyond just loss of income or loss of earning capacity, to, for instance, a person who cannot afford legal services because he needs to pay for major medical procedures due to a serious illness. As difficulties in life that may reduce one's ability to afford legal assistance are very varied, it is good that there is greater discretion. Would the Minister elaborate on how this discretion is to be exercised? Is the aim to help those with around the same needs profile as those under the strict means test even though the need may arise from different circumstances?

This Bill also enables LAB to better manage their resources. Under clause 3, the Director may appoint someone who is not a qualified person under the Legal Profession Act to appear and plead in Court for an aided person. Would the Minister elaborate on the rigorous training that these public officers will undergo so that LAB will continue to be known for its high-quality legal services and so LAB’s clients' interests can continue to be effectively represented?

Notwithstanding the ability to appoint public officers to represent clients, Assigned Solicitors continue to play an important role in the LAB's work. For instance, they still seem necessary for specialised cases involving medical negligence, Syariah Court cases, or where both parties applied for legal aid. Under clause 4, Assigned Solicitors serve for terms of approximately three years.

The scope of legal assistance is expanded under clause 10 where other relevant Court documents, besides judge’s notes of evidence, may be provided without fees. This is a welcome move, especially because other Court documents may be necessary in the civil process. For example, the record of proceedings in a notice of appeal includes a certified copy of the grounds of judgment or order, if any, and a copy of the certified transcript of the official record of the hearing.

In conclusion, Sir, this Bill strengthens access to justice in Singapore by enabling better management of resources, expanding the scope of assistance, and making the application process more straightforward and less rigid. In strengthening access to justice, this Bill also advances the rule of law in Singapore. Therefore, I support it.

Mr Patrick Tay.

Mr Deputy Speaker, Sir, I rise in support of the Bill.

The update and simplification of the means criteria for legal aid to align them with means criteria used in current social support schemes have been long-awaited. The current means test criteria, which take into account the applicant’s disposable income and disposable capital, have been in place since 1958.

To apply for legal aid today, applicants have to furnish documentary proof of their disposable income and disposable capital as part of the legal aid application. Even with such stringent means test criteria, there has consistently been a high percentage of applications, at around 90%, which passed the preliminary means test for legal aid over the past five years. The incidence of abuse is low and the large majority of applicants meet the qualifying criteria.

In 2016, 57% of the legal aid applicants had only secondary educational qualifications or lower. The challenges that this group face in accessing justice are multifold.

First, with lower educational levels, they will meet with more challenges in understanding their legal rights, seeking available recourse and comprehending legal processes.

Second, with limited financial means, there are significant financial challenges in seeking legal recourse.

Third, the inability or difficulty faced in seeking legal recourse can exacerbate existing challenges in their lives due to higher levels of stress arising from the inability to resolve the legal issue at hand.

Over the past five years, about 50% of applicants sought legal aid for matrimonial cases, 10% for monetary claims and 7% for probate matters.

When divorce is on the cards, there would inevitably be strain in the household. The parties involved and their family and children bear the emotional cost of the dragging out of a failing relationship. The ability to seek legal recourse, especially in cases where violence is perpetuated, must be available in the legal system and accessible.

There must also be urgency in helping lower-income claimants recover monies owing to them, and assistance for lower-income families who have lost a loved one to unlock assets of the deceased, especially where the deceased was the breadwinner. While the Public Trustee administers estates of deceased persons where the value of the estate does not exceed $50,000, the Public Trustee is unable to administer the estate where the deceased was the sole lessee of an HDB flat and a child is eligible to inherit the whole or part of the flat.

The mission of LAB is about "Advancing access to justice, the rule of law, the economy and society through policy, law and services." The amendments proposed under this Bill, indeed, further this mission.

It is also timely at this juncture to consider a more integrated approach to provide more holistic support to families which are in need. Legal issues are not merely disputes between litigant and defendant; they can have extenuating and longer-term impact on the family.

To help families to manage stress arising from the legal dispute and any potential fallout, they can be directed to counselling support. Households in need can be directed to social assistance schemes and employment facilitation services.

At the close of the claim, a review should also be conducted to educate vulnerable claimants on how to better protect their legal rights in future. With this, I support the Bill.

Mr Mohamed Irshad.

Hon Deputy Speaker and hon Members, Singaporeans may not often talk about justice, but few will doubt how important it is to have recourse to the law to affirm one’s rights; or to receive proper compensation for one’s work; or to protect one’s property; or to receive a fair arrangement at the end of a marriage; or to obtain protection from abuse. In our pledge, we refer to ourselves as a society based on justice and equality.

To realise that pledge, I believe that justice may be accessible to anyone who seeks it or who requires it. That is why I support this Bill as it is a great step towards strengthening access to justice for Singaporeans who may not ordinarily be able to afford lawyers or seek legal help. Allow me to zoom in on two areas: Public Awareness of Legal Aid and Expanding Services.

Mr Deputy Speaker, I welcome the move to simplify the means criteria for low-income Singaporeans in their applications for legal aid. The adoption of PCHI and the AV of the applicant's place of residence, savings and investments to replace the current arrangement, which is based on disposable income and disposable capital, is simpler and clearer. It will also align the means criteria to what is commonly used in other social support schemes.

I also support the move for greater discretion in the granting of legal aid. There are many applicants who are truly needy and deserving but find themselves unable to meet the means criteria for whatever reasons. A closer scrutiny of these cases and an inclusive approach are welcome.

The recent announcement of a website revamp at the LAB's 60th anniversary dinner is another step in the right direction. I support the digitisation of the registration and document submission process as it will help speed up the process to match assigned solicitors to those who are seeking legal aid.

But based on my interactions with Singaporeans through my outreach work with Roses of Peace, it seems that there are still Singaporeans who may not be aware of the available avenues for legal assistance like LAB or the Criminal Legal Aid Scheme (CLAS), despite efforts by the Ministry as well as legal awareness campaigns by the Law Society of Singapore. I would like to ask the Minister if there are any more steps that can be taken to educate the public, especially those who require legal assistance but are unable to afford it, about the legal help that is available to the public.

Perhaps our civil society and our social service organisations can play a part to help spread the word on the avenues available for legal help.

I note that Singaporeans who are receiving financial assistance from our various social support systems may also often require access to legal aid. However, not all the frontline officers providing assistance to these individuals and their families may be equipped with the right knowledge of our legal aid services.

Perhaps, we can have a Legal Aid Conference to inform and equip these frontline officers from the social sector with basic legal knowledge and information on legal aid so that they can help their beneficiaries. It will also be of great benefit to have a legal aid playbook or an online resource guide that can be accessed by the public.

It is commendable to witness the progress of LAB since 1958. I understand that, to date, it has received about 400,000 applications for legal aid and, in 2017 alone, it received about 9,000 applications. Most were for matrimonial, claims and probate matters.

I also support the increased funding and support for the Criminal Legal Aid Scheme (CLAS) over the past years.

These are important institutions in the provision of legal aid and access to justice. But the public often turn to LAB when it is too late, when issues have come to a head or a problem has arisen. Perhaps, there is a role that can be played in promoting awareness of the law and to equip the public with enough legal knowledge in order to prevent legal issues from occurring.

For example, in the area of promoting micro enterprises among low-income families, LAB or the Law Society of Singapore's Pro Bono Services Office can explore working with community organisations, such as Casa Raudha, the Singapore Muslim Women’s Association (PPIS) and Daughters of Tomorrow (DOT), or our trade associations and chambers of commerce, and even small and medium enterprises (SME) Centres, to equip them with legal resources that can help micro enterprises.

In the example of DOT, it is a registered charity that aims to facilitate livelihood opportunities for underprivileged women to build and sustain financially independent and resilient families. Since its inception in 2014, DOT has enabled 150 women to find jobs and start business projects. Some 40% of these beneficiaries are single mothers with low education – secondary school and below. They have to juggle between caring for their children and making ends meet through their micro enterprises.

Equipping organisations, such as DOT with the right legal resources, such as business contract templates and other relevant knowledge, will go a long way to assist these women and, hopefully, prevent legal issues from occurring, thus, reducing the need for legal aid in a small but important and significant manner.

In conclusion, Mr Deputy Speaker, I support this move to ensure that any Singaporean who seeks justice may obtain it. It is a sign of a compassionate society when we ensure that even those who lack financial means may still be able to afford the ability to protect his or her rights. Access to justice provides all Singaporeans with the same dignity and the same fundamental right to fairness. Mr Deputy Speaker, I support this Bill.

Mr Louis Ng.

Sir, I stand in support of the Bill. Many Members, myself included, have asked for the Director of Legal Aid to be given broader discretion to extend legal aid to those who do not qualify under the means test. I am heartened to see that the Ministry has taken on board our suggestions in allowing the Director general discretion to grant aid if it is just and proper to do so.

It was announced just last week that, from next year, a new system set up by LAB will help applicants access legal aid more quickly by allowing lawyers to browse and select cases, and legal aid applicants to check the status of their applications.

These legislative amendments, coupled with improvements in implementation, are progressive moves towards improving access to justice for the most vulnerable and our becoming a more compassionate society.

Sir, I have three clarifications.

Firstly, the Ministry has stated that the qualifying limit for the new means criteria to be set in subsidiary legislation will take into account the latest income data to maintain the number of eligible households. However, if legal costs have increased, access to lawyers may be beyond the reach to a larger number of households. If that is the case, rather than holding the number of eligible households constant, legal aid may need to be extended to a larger number of households.

When the Act was amended in 2013, the criteria was relaxed to increase the percentage of qualifying citizens and PRs from 17% to 25%. The last large-scale study of legal costs in Singapore was the 2001 Census of the Legal Industry and Profession. The census had suggested that the billable rate of law firms had steadily increased between 1998 and 2000. Is the Ministry tracking the trends in legal costs and the proportion of households for whom legal representation remains inaccessible? Will the Ministry consider increasing the percentage of qualifying citizens and PRs?

Next, currently, an aided person who wishes to appeal a decision must make a new application for legal aid. In the Assigned Solicitor's Guide, the solicitor is advised that they cannot act for an aided person who is looking to appeal a Court judgment. There are strict timelines that must be adhered to in an appeal. This is acknowledged in the Assigned Solicitor's Guide, which advises the aided person to file a Notice of Appeal on their own before making a new application for legal aid. However, whether the aided person decides to appeal is likely to depend on whether they are able to obtain further legal aid. In this situation, it is left to the Assigned Solicitor to decide on their own initiative whether to assist the aided person in filing the Notice of Appeal.

Could the Minister clarify the rationale for subjecting the aided person to another round of means and merits testing to obtain legal aid for the appeal? The means of the aided person might have changed, but I doubt it would have changed significantly for most persons. Admittedly, the merits of the case may need to be considered afresh if it is going to an appeal. An unfavourable decision may cast new light on the merits of the claim. In a favourable decision where the aided person is appealing against the amount awarded, it should be considered whether the sum awarded truly is so unsatisfactory as to warrant an appeal and whether this should be supported with legal aid.

However, given that the claim has gone through an initial round of merits testing, it may not need the in-depth assessment given to a new claim. Again, considering the strict timelines that must be adhered to in an appeal, would the Minister consider an expedited process for assessing whether to extend legal aid to an aided person who wishes to file an appeal?

Similarly, a new application for legal aid must be made for an aided person to enforce the judgment. Could the Minister also clarify the rationale for subjecting the aided person to another full round of means and merits testing to obtain legal aid in enforcing the judgment? The means of an aided person would similarly not have changed much after obtaining the paper judgment from the Court. The merits of the case would be further reinforced by the favourable judgment given by the Court.

Having supported an aided person all the way to the point of obtaining a paper judgment, surely it would be logical for Legal Aid to see the claim all the way through until the aided person obtains the sum claimed, which is the entire objective of filing a claim in the first place.

Would the Minister consider allowing an initial Grant of Aid to extend to enforcement processes that an aided person may need to undertake? Sir, notwithstanding my clarifications, I stand in support of the Bill.

Mr Gan Thiam Poh.

Mr Deputy Speaker, Sir, the amendments will certainly simplify the criteria for legal aid applications substantially. Instead of considering several components of disposable income and capital, focusing on the main categories of the applicant's per capita income, home AV, savings and investments will help to expedite the assessment process.

However, the new set of criteria still leaves certain applicants at a disadvantage. For example, an applicant may need to support parents, siblings or other vulnerable family members who do not stay with him under the same roof and thus are not considered during the computation of per capita income. I hope the Ministry will be able to exercise some flexibility for such applicants on a case-by-case basis.

I would like to seek clarifications about the role of CPF contributions under the new criteria. Will it be considered a component of savings and investments? If so, can it be excluded since the payouts from CPF are not immediate? In addition, if an applicant has a negative net worth, that means his personal liabilities exceed his personal assets. Can this be taken into consideration for his application?

May I ask the Minister how many applications were received in the last 10 years and how many were unsuccessful? What were the main reasons for the unsuccessful applications? Can the Ministry provide details of the various categories?

Lastly, for applicants rejected for legal aid, can the Ministry consider alternative assistance for them? For example, a deferment payment scheme for legal fees may be useful for those who are cash-strapped or who are asset-rich but cash-poor. With that, I conclude with my support for the Bill.

Mr Murali Pillai.

Mr Deputy Speaker, Sir, I declare my interest as a practising lawyer and an assigned solicitor with LAB.

I welcome these landmark amendments proposed to the Legal Aid and Advice Act which comes 62 years after the enactment of the original Bill.

The raison d’etre behind the Bill when it was moved by the then Minister for Labour, Mr Lim Yew Hock, in 1956 remains the same. This point was put across eloquently by the hon Minister Ms Indranee Rajah in this House in 2013 when she said, "Access to justice is one of the cornerstones of our society. We may have the best laws, the best Courts and the best system, but all that would be lost if they cannot be accessed by persons in need. Like all things, there is a cost to legal services and not everyone can afford such services. It was with this in mind that the Legal Aid and Advice Act was originally enacted in 1956 to ensure access to justice. That objective remains as relevant today as it was then".

We have just heard the Senior Minister of State, Mr Edwin Tong, subscribing fully to this statement and the hon Member Mr Abbas Ali also echoed a similar point.

When the LAB was established pursuant to the Act on 1 July 1958, Singapore became the first country in Southeast Asia to have such a legal aid scheme.

Currently, LAB sees over 9,000 applications for legal aid annually. It celebrates its 60th anniversary this year. It is timely that we review our legal aid scheme to ensure that we keep abreast with changes to our society.

A key reform in the Bill is the changes to the means test to be used to assess eligibility for legal aid. I recognise that it is not easy to fix a fair and equitable means test that is totally immune to criticism. The new means criterion of PCHI is commendable, as it allows more flexibility in the assessment of means, to take into account the overall income situation of the household and not the applicant's individual situation, which may not be reflective of his/her situation.

Let me give Members an example. Last month, I filed a Parliamentary Question arising from a case. It concerned a legal aid application made by a father, seeking assistance to be appointed as a deputy of his mentally disabled son. I asked why is it that the father was treated as the applicant as opposed to the son. Ordinarily, his son would have been eligible for legal aid. But he cannot apply because he is not mentally capable. The application for deputyship and legal aid was made by the father. The application, after all, was for the benefit of the son and it was meant to facilitate the care and management of his son. Unfortunately, the father was deemed not eligible for legal aid, as the current means test only looks at his circumstances as an individual and not that of his son.

Under the Act, the Director of Legal Aid may exercise discretion to exclude up to $30,000 to determine the disposable capital of the applicant if the applicant is suffering from mental disability, a point that the learned Senior Minister of State just made. But here, this ground cannot be raised because, as far as LAB is concerned, the applicant is the father, who is mentally sound.

So, one wonders when this proviso can apply because, ordinarily, one assumes that applicants must be compos mentis.

In his reply, the Minister for Law stated, "It is not possible for legal aid applications to be made for, or on behalf of, the mentally incapacitated person, and then use that person's means to support the legal aid application".

In my respectful view, such an approach may operate unfairly against the family as it did not adequately take into account the circumstances surrounding the mentally incapacitated son and the reason for the application in Court in the first place.

I am glad to note, however, that if this Bill is passed, then this issue will be taken care of because the PCHI will be adopted as the means test, both the income of the father and his son will be taken into account to assess the father's means more holistically. LAB will also be vested with powers to exercise greater flexibility to provide targeted help to applicants in extenuating circumstances.

The means test must be flexible enough to remain relevant even when there are ups and downs in Singapore's economic growth. In terms of the qualifying limit for the new PCHI means criterion, which I understand will be set later in subsidiary legislation after taking into account the latest income data, could the hon Senior Minister of State please elaborate what are the considerations that will be inputted in relation to setting the limit? For example, would it be based on the 20th percentile of the PCHI?

Would the income limit exclude CPF contributions, a point that the hon Member Mr Gan Thiam Poh mentioned? This should be the case, in my respectful view, because it should take into account actual disposable income.

How about circumstances where families are put into significant expense? I believe that the Senior Minister of State mentioned that this would be taken into account. What will be the principles governing such assessments?

Apart from the new means test, the Bill now provides that the Minister may direct the Director of Legal Aid to issue a Grant of Aid even though the Director is of the opinion that the applicant does not satisfy the prescribed means criteria, if the Minister is of the opinion that it is just and proper for legal aid to be granted. May I clarify: does this operate as an appeal to the Minister by the applicant who has been refused a Grant of Aid by the Director? This is presumably so, because the Director would have already made an assessment of eligibility at the first instance.

If so, would the Minister require the Director to provide grounds for his decision and would such grounds be provided to the applicant so that the applicant can comment on it in its appeal to the Minister?

And what are circumstances that are contemplated where it would be "just and proper" for the Minister to grant legal aid?

May I also please ask what is the outcome of the suggestion that was made in this House by the hon former Member Mr Hri Kumar when the Act was last amended in 2013 when he suggested to Minister Indranee Rajah that the Government, through this Act, introduce a Public Defender scheme, drawing from the private sector, to help indigent citizens who face criminal proceedings? At that point in time, I read the Hansard and it was indicated that the Ministry would consider the suggestion. I would be grateful for an update, please.

Finally, the explanatory notes of the Bill state that the Bill will not involve the Government in any extra financial expenditure. I would be grateful for a clarification on the statement. I note that the Ministry of Law (MinLaw) has stated that the qualifying limit for the PCHI test will be set such that there will be no material impact on the number of households who are eligible for legal aid. However, there would presumably be some increase in eligible cases given the shift from individual-based criteria to household-based criteria. Would there not be a need for additional resources to be provided to LAB to deal with this?

I would now conclude. Over 60 years, the views expressed in this House is consistently that justice must be accessible to all. The Act has been reviewed regularly over the years to ensure this goal. I support the amendment Bill for its progressive changes made in the way that we assess means eligibility for legal aid to ensure that justice remains accessible by all.

Ms Rahayu Mahzam.

Mr Deputy Speaker, I declare that I am a lawyer in private practice. Allow me to begin my speech in Malay.

(In Malay): [Please refer to Vernacular Speech.] One of the key principles of our legal framework in Singapore is access to justice. This means that one should have the right to obtain legal advice and present one’s case in Court regardless of social standing or financial ability. This right should not be hampered by high legal costs or complex administrative processes. Therefore, efforts must always be made to ensure that support is available to those who require legal aid.

In Singapore, we have legal clinics, where the public can access general legal aid for free. We have the LAB that can provide assistance for civil cases like divorce cases and there is also CLAS for criminal cases. I also know of lawyers who sometimes would do pro bono or low bono work to help their clients who may have difficulties in paying the full legal costs.

The types of assistance I mentioned earlier have more or less helped to address concerns about the issue of access to legal aid. However, there are existing challenges that deserve some attention. Today, we are debating specifically on the Bill for legal aid and advice that will form an administrative guide for LAB, which handles legal aid for civil cases.

One of the concerns often raised is the process of means-testing someone before legal aid can be provided by LAB. Currently, when applying for legal aid, there are numerous details that must be provided and documents to prepare. This process can be daunting. It also takes time and causes the means-testing process to be further delayed. In the Bill currently before us, there are proposals to establish new means criteria that have been updated and will simplify the application for legal aid. I support the proposal. It is hoped that with these new criteria, the application process can be shortened. I also hope that the criteria that will be established can be scrutinised so that more people can be helped.

On this note, another matter that is often raised is the eligibility for legal aid. Having legal troubles is not something one often plans for or expects. So, when one needs to commence action or defend a case in Court, he or she may face difficulties financing the legal costs, even though he or she may be earning a decent income. At the moment, LAB is constrained by the Act in its present form and can only provide assistance to those who can fulfil the prescribed criteria. I am, therefore, grateful that amendments have been proposed to allow discretion in granting legal aid to those who may not completely fulfil the prescribed criteria, but nonetheless still require help. Certainly, there should be guidelines for the proper exercise of this discretion. I am hopeful that this discretion will be used judiciously and can benefit more people who may be going through a difficult time in their lives.

(In English): Access to justice, regardless of social standing or financial ability, is a cornerstone of our legal framework in Singapore. Efforts must be made to overcome issues of cost, delay or complexities of the legal system that may hinder access to legal advice or the ability to present one's case in Court. In Singapore, we have legal clinics, the LAB and CLAS to partly address the need for access to justice. I also know of lawyers who would do pro bono or low bono work to assist clients who may not be able to afford legal costs.

However, there are existing challenges within the current framework in the provision of legal aid and advice. Therefore, this Bill is a welcome move and the opportunity to discuss this matter today is much appreciated.

One of the issues often raised is the means-testing process that is currently in place. The assessment process calls for much information and numerous documents to be provided. This can be overwhelming and daunting for the applicant. At a time when they most need help and are most likely preoccupied with significant matters happening in their lives, the requirement to prepare copious documents before they can get help, adds to the stress. This requirement also often delays the process because the applicant would need to set aside time to look for and prepare the documents. I am, therefore, very pleased to note that the Bill proposes to give the Ministry the flexibility to establish new means criteria to be set out in the subsidiary legislation. I note the Ministry’s efforts in reviewing the means criteria, to update and simplify the criteria. I also note that the plan is to align the means criteria to those commonly used in current social support schemes.

While I understand the need for alignment, there are already concerns with the existing means criteria. For example, in determining PCHI, we have heard some grievances of those who have children or relations living in the same address but not contributing to the household income. Also, in considering the AV of a property, it would be pertinent to note that there may be people who are residing in a private property not as a luxury but because of their circumstances. These grievances may be adopted if we take the PCHI and AV assessment methods wholesale. Would there be some way of addressing some of these issues head-on and provide for appropriate deductions or exceptions at the outset? I am not suggesting that the assessments are made less rigorous. I believe it is important to check properly and only grant aid to those who truly deserve it. However, if we already know that the applicant may be facing some difficulties, perhaps we could account for these situations, subject to the provision of some basic evidence.

The other issue that is often raised as a pain point is the eligibility for legal aid. Could there be adjustments to the limits of the prescribed means test to allow for more to qualify for legal aid? Having legal troubles is not something one often plans for or expects. It is not a habit to set aside savings for legal costs. So, when there is a need to commence an action or defend a case in Court, it is common to hear of situations where the individual is financially stretched and has difficulties financing his or her legal costs, even though he or she may be earning a decent income. In recent times, there have been calls for more legal assistance to be given to the sandwich class. I appreciate that a line has to be drawn somewhere and we will not be able to help everyone. However, we should endeavour to help as many as possible and we need to look at some measures to be able to address this gap.

I am, therefore, grateful that there are provisions in this Bill to give the Minister discretion to grant legal aid if it is deemed just and proper. I believe there will be guidelines for the proper exercise of this discretion. I am hopeful that this discretion would allow for more deserving applicants to receive help even though they may not meet all the prescribed means requirements.

On a separate note, in the effort to enhance access to justice and close the gaps, I believe one strategy is to encourage and incentivise low pro bono efforts by lawyers. We have already many lawyers doing pro bono work. But this often comes at a cost to the lawyer’s earnings. I know people joke about how much a lawyer earns. But the truth is that not all lawyers are mercenary and not all lawyers earn big profits. A law practice is also a business and would have overheads and operational costs, just like a medical practice or other professional services. In fact, the legal fraternity also has to go through industry transformation like other industries in Singapore.

Bearing this in mind, and considering the need to close some gaps, we may, therefore, want to cast our sights on a more sustainable solution which could be a win-win solution for all. At the Opening of the Legal Year this year, Chief Justice Sundaresh Menon, proposed a family law assistance scheme. The idea is to develop a low bono model to increase access to legal services for those in the sandwich class who are embroiled in family disputes. This is a meaningful suggestion which is being looked into. There may also be a further need to incentivise lawyers with Continuing Professional Development (CPD) points to recognise them for efforts in pro bono as well as low bono work. I hope there would be more support in thinking about and developing such low bono models that could allow for more to benefit from getting proper legal advice and aid, but which could also support the legal sector.

Mr Deputy Speaker, I believe this Bill is a step in the right direction. I stand in support of the Bill.

Mr Henry Kwek.

Mr Deputy Speaker, I stand in support of the amendment Bill. I would like MinLaw to clarify about four points.

First, clause 3A states empowering the Director of Legal Aid to appoint "suitable and experienced" public officers who are not qualified persons under the Legal Professional Act. Can I understand more about how Legal Aid will determine what kind of processes or cases will merit public officers rather than qualified persons? And will it compromise the interest of the aided person in representing his case?

Second, clause 5. I note that legal aid is provided to both Singaporeans and PRs. Are all PRs given the same rights as Singapore Citizens with regard to legal aid? Or is there another set of tighter criteria necessary for PRs to qualify, such as closer ties to Singaporeans?

Third, clause 7(a) allows the Director to exercise this new power instead of a board. Can MinLaw share the rationale of this change? How can we balance achieving this potential increased efficiency with the downside of having the Director being a bottleneck or a single point of failure?

Last of all, can MinLaw share about how LAB assesses financial criteria on who to help, especially on the grounds of discretion? For example, there are some families with higher income than the threshold, but the family relationship may have been strained and money is not allowed, or the family have significant medical expenses or debts.

Another point we could look at is the cost of the legal aid to be provided. I mean, say, for example, the sandwich class. They are two different matters. One is to get LAB to handle something that costs thousands of dollars of legal fees. It is another thing to ask the sandwich class to take on a very serious lawsuit which can go on to tens of thousands of dollars. So, will the cost of the legal aid that is being provided be considered in the discretionary framework? Notwithstanding my queries, I support the amendment Bill.

Senior Minister of State Edwin Tong.

Mr Deputy Speaker, I thank the Members for contributing to this debate and also for sharing in our vision that access to justice must be a cornerstone of our legal system. I also thank the very many volunteer lawyers, pro bono lawyers like Mr Murali Pillai who is an Assigned Solicitor for LAB, because these people, apart from the rules and regulations that we make, these lawyers, with their pro bono work, contribute to the richness of making justice accessible to even the most disadvantaged in Singapore.

There are several queries on the Bill and I would like to jump straight into addressing them.

Mr Gan Thiam Poh asked about the number of legal aid applications. In the past 10 years, LAB had received a total of 97,100 applications approximately. Of these, 88,800, or more than 90%, passed the preliminary means test.

In general, applicants who were unsuccessful had failed the eligibility criteria because they exceeded the disposable income or capital assets limit. Around half of LAB’s cases concern matrimonial matters. Other common cases concern the enforcement of Court orders, monetary disputes and also probate.

Let me next address the questions about the new means criteria and limits. Mr Henry Kwek asked about the assessment, while Mr Christopher de Souza and Mr Murali Pillai asked about the qualifying limits and how they would be set. Mr Gan Thiam Poh asked whether CPF moneys would be included in the assessment of the applicant’s savings and investments, and Mr Murali Pillai also asked whether CPF contributions would be included in the assessment of the applicant’s income. Finally, Mr Murali Pillai asked if there is a need for additional resources to be provided to MinLaw to administer the new means criteria.

MinLaw will adopt the PCHI and AV of the applicant’s place of residence, savings and investments as the new criteria to replace the current disposable income and disposable capital criteria. The new criteria are simpler and much more aligned with what are commonly used in current social support schemes.

The new means criteria consider the applicant's gross income and assets, instead of his disposable income and disposable capital. We will incorporate most of the permitted deductibles within the current means criteria, such as CPF contributions, when setting the new income limits in the new assessment criteria to minimise the risk that those applicants who were previously eligible would no longer be eligible when we move from disposable income to gross income.

We will not include the applicant's CPF moneys in the computation of the applicant’s savings and investments. This is also consistent with our existing means test.

The qualifying limit for the new means criteria will be set later in subsidiary legislation, as I said earlier, to take into account the 2018 income data. But it will be set at a level where there will be no material impact on the number of households which will remain eligible for legal aid, and it will be set at a level which would ensure that a similar level of households at present, which is approximately 25%, will be maintained.

Next, we do not anticipate at this point in time a significant spike in the number of cases that come forward, and, hence, my point earlier about the allocation of Government resources. So, it will be managed. My Ministry will allocate the appropriate resources to deal with any increased caseload as they arise. But bear in mind also that the amendments do provide for Specialist Legal Executives to come on board to lend support to the giving of advice and also to appear in Court for some of these cases. So, that will also ease the load on LAB.

Mr Gan Thiam Poh asked if the use of household income would disadvantage applicants who need to support family members staying in a different household. In other words, what Mr Gan is saying is that if I look at only the household income of this individual, it may not give me a full picture because he may be supporting a family member residing in a different household.

We do not consider family members living in a different household in calculating the PCHI because family relationships can be complex and diverse. The situation that Mr Gan Thiam Poh cited could well work the other way, where an applicant could be supported by a family member not living in the same household. In other words, he is coming to apply, and based on his PCHI, he would qualify, but yet, he is also being supported by a family member living outside of his household. The Government is not privy to the family dynamics in each situation and so, it is best at this stage to use the household income as the best proxy for family support.

Furthermore, this will also be more convenient for applicants, as they will not have to provide information on family members who may not live with them, the extent of their support and the extent of their familial relationship, and why that may be. So, at present, we will keep to using the PCHI.

Given these, we will adopt PCHI as I said, although I would stress that, in appropriate cases, we would also be able to consider the scenario that Mr Gan Thiam Poh mentioned, where it is just and proper to do so. That is precisely the reason for the framework that we are building into the new amendments, where if it is just and proper, then the Minister may have the discretion to allow aid to be granted. To take the example a bit further, if the applicant is the sole source of support for that family member, and the family member is not a beneficiary of other Government schemes, those are factors that can be taken into account.

Mr Louis Ng had asked whether the Ministry is tracking the legal costs and the proportion of households for whom legal representation remains accessible and whether we would consider increasing the coverage for civil legal aid. Ms Rahayu Mahzam also asked if there could be adjustments to the limits to allow for more to qualify for legal aid.

I would assure Members that MinLaw regularly reviews the means test for civil legal aid, taking into account legal costs, the cost of living and other factors, to ensure that legal aid remains accessible to Singapore Citizens and also PRs of limited means who cannot afford their own lawyers.

Legal aid is targeted and given only to those with limited means, as it has to be, because we have limited resources and we need to be prudent about how we allocate them. In the most recent review leading up to this Bill, we had taken into account these factors in deciding to retain the coverage at the present levels. And as I mentioned earlier, at this level, approximately 25% of households are covered.

Mr Gan Thiam Poh asked if we could consider negative net worth as part of the means assessment, if the applicant's debt liabilities exceed his assets. Mr Murali Pillai also asked, on a related note, if we would consider circumstances where families are put into significant expense as a result of intervening events. We do not generally exclude liabilities, such as debts, when we assess an applicant's means. I think what Mr Gan Thiam Poh has in mind is that if you are servicing or have taken out a loan which may be secured and where the security value may be below the value of the loan that has been taken, whether that can be taken into account. The reason we do not do that is because the applicant may have secured debt liabilities, for example, a mortgage or a car loan, which is quite common, but may still possess savings or income above the means limits. This may then allow him to afford legal fees. He would not be considered, in that situation, a person of limited means.

However, if that person or the applicant has liquidated his savings and investments to pay off the debts and thereafter, remains in a financial situation as would allow him to come within the means criteria, then yes, that person will be considered for assistance.

We will also consider an indebted individual with extenuating circumstances on a case-by-case basis, and may grant aid where it is just and proper to do so. For example, if the debt was incurred due to a significant expense as a result of an intervening event, as Mr Murali Pillai puts it, for example, a serious acute medical condition, then yes, those are circumstances that will be taken into account as well in the assessment.

At the same time, whilst we are not expanding the coverage or considering the negative net worth and family members living in a different household when assessing means, the Bill, as I said earlier, does provide for greater flexibility and discretion for aid to be granted to deserving applicants. And this will allow us to provide aid in a more targeted manner, which would also achieve greater equity.

This brings me to the questions from Mr Christopher de Souza, Mr Henry Kwek and Mr Murali Pillai who asked how this flexibility could be exercised. Mr Murali asked, in particular, what are the circumstances where it would be "just and proper" to grant aid. I have given a sense of what that might be in my earlier paragraph. Ms Rahayu also asked if we can consider extenuating circumstances, for example, children or relatives staying in the same household but not contributing to the household income, or applicants who stay in private properties due to their circumstances, in our computation of PCHI or AV.

The intention behind the amendments and the regime that has been set in place with the amendments in this Bill is, of course, to allow for a more flexible assessment to be made in order that aid can be granted if the Minister is of the opinion that it would be just and proper to do so, the key words being "just and proper". We want to retain that flexibility on a case-by-case basis, because each case will be different; the circumstances present for each applicant will be different and we want to have the flexibility to be able to assess these factors on a case-by-case basis. When such cases arise, the Minister may authorise any person, and that includes a panel of persons, suitably qualified, to make that assessment.

In exercising the discretion, we may consider granting aid to an applicant who might otherwise fail the means criteria but still not be able to afford legal services due to extenuating circumstances, such as those that Members had mentioned. Mr Murali Pillai gave some examples and Ms Rahayu Mahzam as well. We will also consider if family members staying in the same household cannot contribute to the individual’s legal costs. Children are one example; the other would be where the family members living in the same household may be estranged from one another. I just do not want to be taken in my answer to be limiting the circumstances which we consider. So, I do stress that it is on a case-by-case basis and looking at the particular facts of each case.

Applicants who fail the means criteria will be informed of the reason. Applicants who may then have extenuating circumstances can bring this up to the Minister, under the procedure. It is not a statutory appeal. At this point in time, we are working out the operational details and also the procedural steps necessary for this to be highlighted, but it will not be treated as a statutory appeal.

Mr Gan Thiam Poh asked if the Ministry can consider alternative sources of assistance to applicants who do not qualify for legal aid, in other words, persons who fail the means test. And the example Mr Gan Thiam Poh gave was to ask solicitors to grant a deferred payment scheme for legal fees.

Government assistance is generally given to those most vulnerable and those most in need of assistance. And that is what the current regime for means criteria seeks to achieve.

If an applicant satisfies these criteria, plus the merits test, he will be given legal aid. But if the applicant does not satisfy the criteria, but goes on, nonetheless, to engage a lawyer, we will be unable to mandate that there be a deferred payment scheme for such services, which are really between the individual as the client, and his solicitor. But this, not being able to do it by legislation, does not stop a client from requesting his lawyers to consider either an instalment scheme or a deferred payment scheme as may be appropriate.

Next, we will also be making various improvements to the administration of legal aid.

Mr Christopher de Souza asked for an elaboration of the rigorous training that public officers who are not qualified persons under the Legal Profession Act will undergo in order to appear and plead in Court for an aided person. Mr Henry Kwek asked if MinLaw would decide what cases these public officers would take on and whether this would compromise the interest of aided persons.

LAB will ensure the thorough and proper training of such persons and will ensure that no aided person’s interest will be compromised as a result of the use of such public officers. LAB's Legal Executives are well-trained and they complement the work of Legal Officers.

Currently, Legal Executives already perform a significant amount of work at LAB and this includes the taking of instructions and preparing drafts of certain documents. We feel that many of them are capable of doing more and can be made to do more.

So, we will allow our best Legal Executives to be appointed by the Director to provide legal advice and also represent applicants in Court proceedings and at mediation. All appointed Specialist Legal Executives will have to attend legal knowledge courses on relevant subject areas to the kind of work that they do. So, it would be in areas of divorce, mediation, the Singapore Legal System, professional skills and, of course, legal writing. These courses will be provided by both external providers, as well as through the inhouse legal expertise which already exists at LAB.

They will have to go through a practical training programme, which will cover skills, such as drafting, client-management, client-facing work, Court etiquette and so on. They will be accompanied and receive inhouse supervision by experienced legal officers and have assessments made, before they are allowed to attend Court and represent clients.

This training will ensure that the Specialist Legal Executives will be well-equipped to handle the expanded scope of work so that LAB’s clients’ interests will be effectively represented. Even then, for a start, we intend to limit the cases where such officers will take up to simpler uncontested divorce proceedings where the matrimonial assets are $1 million or less, as a starting point.

If the matters that these officers are handling become subsequently contested or more challenging, they will be handed over to a lawyer, who will take over the matter. We will continually review the role of the Specialist Legal Executive to consider what more they can do. This will, no doubt, ease the burden and bring down costs overall as well as allow for cases to be managed more expeditiously, as I mentioned earlier.

Mr Henry Kwek asked about the rationale for allowing the Director, instead of the Legal Aid Board, to grant aid for straightforward matters. Mr Kwek asked if we could avoid the Director being a "bottleneck".

Currently, at this point in time, the merits of all applications are assessed by the Legal Aid Board which comprises the Director of Legal Aid and not fewer than two solicitors from a panel of solicitors maintained under the Act. The Board meets once fortnightly. This means that after LAB has prepared a legal opinion for an applicant, the applicant may have to wait for up to two weeks before aid is granted, deferred or refused.

Allowing the Director in such cases to grant aid for straightforward matters will help, and not hinder, the applicant’s case by up to two weeks, as the Director can now immediately determine whether in that case aid should be granted or not, assuming the means criteria is satisfied, without waiting for the Board to convene.

The discretion, however, will only be exercised in straightforward matters, such as uncontested matters relating to Probate, Letters of Administration and Guardianship matters where the defendants consent to the proceedings. Any application for which aid may be refused will still go through the Legal Aid Board.

Let me just wrap up with a few of the other clarifications that Members have raised.