Hansard, Monday, 6 November 2023

1 Mr Zhulkarnain Abdul Rahim asked the Minister for Foreign Affairs (a) what are the plans of the Government to help alleviate the humanitarian crisis faced by civilians in Gaza impacted by the recent conflict in Israel and Gaza in the Palestinian Territories; and (b) how does the conflict impact Singapore's Enhanced Technical Assistance Package (ETAP) currently rendered to support the Palestinian Authority through capacity building of Palestinian officials and scholarships for Palestinian postgraduate students.

2 Mr Christopher de Souza asked the Minister for Foreign Affairs how can diplomacy best work to reduce the tragic loss of civilian lives on both sides in the latest Israel-Hamas conflict.

3 Mr Christopher de Souza asked the Minister for Foreign Affairs how will Singapore use international platforms to help ensure that all parties in the Israel-Hamas conflict will abide by international humanitarian law.

4 Mr Christopher de Souza asked the Minister for Foreign Affairs how will Singapore continue to support a negotiated two-state solution consistent with the relevant UN Security Council resolutions.

5 Mr Liang Eng Hwa asked the Minister for Foreign Affairs (a) whether the ongoing conflict between Israel and Hamas has any bearing on our diplomatic position in the Middle East region; (b) what more can Singapore do to help alleviate the severe humanitarian crisis in Gaza; and (c) how do we continue to safeguard and uphold our multi-racial and multi-religious peace and harmony amidst the conflict.

6 Mr Dennis Tan Lip Fong asked the Minister for Foreign Affairs what diplomatic efforts have been or are being undertaken by the Singapore Government to persuade all parties involved in the current Israel-Hamas conflict from taking any further actions which would lead to the harming of innocent civilians or non-combatants.

7 Mr Dennis Tan Lip Fong asked the Minister for Foreign Affairs (a) what support has been provided or is being provided by the Singapore Government to Singaporeans living or working in Israel or Gaza since the outbreak of the current Israel-Hamas conflict; (b) how often are the consular emergency plans for Israel, Palestine and other hotspots around the world updated; and (c) when was the last time the consular emergency plans for Israel and Palestine were updated.

8 Mr Sharael Taha asked the Minister for Foreign Affairs in light of the humanitarian crisis in Gaza (a) how does the Government ensure that charitable organisations such as the Rahmatan Lil Alamin Foundation is able to get aid donated by Singaporeans to the intended beneficiaries; and (b) beyond financial assistance, whether there are any Government supported programmes for Singaporean donors to do more to help alleviate the humanitarian crisis in Gaza.

9 Assoc Prof Jamus Jerome Lim asked the Minister for Foreign Affairs (a) whether Singapore has plans for how it will scale up humanitarian aid to Israel and Palestine in the event of an escalation of hostilities; and (b) whether it has considered the delivery of such aid via nearby countries such as Lebanon and Jordan, given the practical difficulties of providing such aid directly in an active conflict zone.

10 Mr Saktiandi Supaat asked the Minister for Foreign Affairs (a) whether he can provide an update on what more Singapore can undertake to actively engage within the United Nations (UN) framework to advocate for adherence to the international rule of law in the Israeli-Hamas conflict; and (b) what further actions within and outside the UN framework which the Government is contemplating to take to help alleviate the urgent humanitarian situation in the Israel-Hamas conflict such as helping civilian refugees to leave the conflict area.

11 Assoc Prof Jamus Jerome Lim asked the Minister for Foreign Affairs what is Singapore's position on the definition of reprisals under Rule 145 of customary international humanitarian law.

12 Mr Sharael Taha asked the Minister for Foreign Affairs in light of the ongoing conflict in Gaza and Singapore's longstanding relationship with the Palestinian Authority (a) what are the steps taken to ensure the safety of Singapore's representative office in Ramallah; (b) how will Singapore continue to engage the Palestinian Authority and provide support through programmes such as the Singapore Cooperation Programme and the Enhanced Technical Assistance Package; and (c) whether such assistance should be placed on hold to focus instead on more pressing needs like humanitarian aid efforts.

13 Mr Sharael Taha asked the Minister for Foreign Affairs in light of the UN Secretary-General's call for immediate humanitarian ceasefire (a) what role can Singapore play on the international stage to help highlight the urgency of the humanitarian crisis that this conflict has brought about; (b) whether Singapore can play a bigger role in reiterating and reinforcing the call for an immediate humanitarian ceasefire; and (c) what else can Singapore do to help promote peace and stability in the region.

14 Mr Mohd Fahmi Aliman asked the Minister for Foreign Affairs (a) whether he can provide an update on Singapore's involvement in providing humanitarian assistance in the ongoing Israeli-Hamas conflict; (b) what specific initiatives or aid programmes has Singapore been engaged in; and (c) how does the Government plan to contribute to the peace and stability of the affected region.

15 Ms Mariam Jaafar asked the Minister for Foreign Affairs in light of the statement by independent experts from the United Nations (UN) which suggests that indiscriminate attacks against civilians in the Israeli-Hamas conflict amount to war crime, whether he will consider (i) reiterating Singapore's principled position on the need to uphold international law and principles enshrined in the UN Charter to the Israeli Government and (ii) supporting the UN Secretary-General's call for an immediate humanitarian ceasefire in the conflict to realize humanitarian efforts and ease civilian suffering.

16 Mr Xie Yao Quan asked the Minister for Foreign Affairs what are the core national interests undergirding the Singapore Government's position on the escalating violence in Gaza and Israel.

17 Mr Xie Yao Quan asked the Minister for Foreign Affairs (a) whether the Government will consider calling for a ceasefire in Gaza; and (b) what conditions or situations must come to pass before such a call for a ceasefire becomes imminent.

18 Mr Xie Yao Quan asked the Minister for Foreign Affairs what are the Government's plans to safeguard Singapore's peace and harmony should the situation in Gaza and Israel deteriorate further and for longer.

19 Dr Wan Rizal asked the Minister for Foreign Affairs in light of the recent conflict escalation in the region of Gaza and the reported challenges in delivering humanitarian aid to the affected civilian population (a) what measures are being considered or undertaken by the Government to contribute towards humanitarian assistance in the region, ensuring that essential aid reaches those in need; and (b) how is the Government coordinating with international and regional entities to address the humanitarian concerns arising from the situation effectively.

20 Dr Wan Rizal asked the Minister for Foreign Affairs in light of the recent conflict escalation in the region of Gaza and referencing the applicable United Nations conventions (a) what is the Government's position regarding the recognition and classification of actions as war crimes; and (b) how does our nation's stance align with international standards and frameworks in ensuring accountability and justice, whilst maintaining a balanced and impartial approach towards all parties involved in the conflict.

21 Ms Nadia Ahmad Samdin asked the Minister for Foreign Affairs how can the Government further promote durable peace proactively both in Singapore and abroad amidst overseas conflicts that have the potential to affect and divide local communities, such as the Israeli-Palestinian crisis.

22 Ms Nadia Ahmad Samdin asked the Minister for Foreign Affairs what is being done to ensure that humanitarian aid donated by Singapore can effectively and urgently reach civilians affected by the violence in the Israeli-Palestinian crisis.

23 Ms Mariam Jaafar asked the Minister for Foreign Affairs how can Singapore play a role in renewing diplomatic efforts to work on a negotiated two-state solution to the Israeli-Palestinian conflict that is consistent with relevant United Nations Security Council resolutions.

24 Mr Mohd Fahmi Aliman asked the Minister for Culture, Community and Youth (a) whether he can provide insights into how the Singapore community, in response to the ongoing conflict in Gaza, can demonstrate strong engagement and support for peace efforts; and (b) what measures and strategies does the Ministry have in place to reinforce religious harmony and encourage inter-faith dialogue within Singapore, especially in light of global events that may impact Singapore's diverse religious landscape.

25 Mr Zhulkarnain Abdul Rahim asked the Minister for Social and Family Development and Minister-in-charge of Muslim Affairs (a) what role can religious teachers and mosques play to support the local Muslim community spiritually and emotionally, in understanding the conflict and humanitarian crisis in Gaza and the rest of the Palestinian Territories; and (b) what steps can be taken to raise public awareness to verify that donations for such humanitarian causes go to legitimate sources.

26 Mr Neil Parekh Nimil Rajnikant asked the Minister for Education (a) what steps is the Ministry taking to ensure that students in our schools and junior colleges are not unduly swayed in their views and thinking over the Israeli-Palestinian conflict due to misinformation; (b) whether there are any instances where schools, junior colleges or educators have faced conflict between students who take opposing sides over the Israeli-Palestinian conflict; and (c) if so, how will such cases be dealt with.

27 Mr Neil Parekh Nimil Rajnikant asked the Deputy Prime Minister and Minister for Finance in view of the ongoing Israeli-Hamas conflict, how does the Government plan to safeguard the future of Singapore's (i) businesses (ii) investments and (iii) research interests in the Middle East region, especially in Israel.

28 Mr Desmond Choo asked the Deputy Prime Minister and Minister for Finance what is the expected impact of the Gaza conflict on Singapore's (i) economic growth and (ii) energy prices.

29 Mr Don Wee asked the Minister for Defence what are the lessons that Singapore can draw from the ongoing violence in Israel.

30 Mr Alex Yam asked the Minister for Defence with regard to the surprise attacks and major incursions into Israeli territory by Hamas, what lessons can be drawn for Singapore's security and intelligence apparatus.

31 Mr Alex Yam asked the Minister for Home Affairs in light of the major surge in violence in the Middle East (a) whether there has been an increased rhetoric or activities by extremist groups in the Southeast Asian region in weeks since the incursions by Hamas into Israel; and (b) what are the precautions for Singaporeans to take in light of this.

32 Mr Alex Yam asked the Minister for Home Affairs with the spread of violence in the Middle East (a) whether the Ministry has received reports of increased anti-Semitic rhetoric or inter-religious disagreements online and offline; (b) what is the Ministry doing to ensure that inflammatory language coming out of the conflict areas does not spill over into the local community; and (c) how can the local community continue to preserve the harmony in Singapore.

33 Ms Joan Pereira asked the Minister for Home Affairs in view of the evolving situation in Gaza (a) whether the authorities are stepping up their counter-terrorism monitoring measures; and (b) whether any spike in suspicious activities has been detected, including those in the online space, that could pose as a terrorist threat.

34 Dr Syed Harun Alhabsyi asked the Minister for National Development (a) over the last three years, what is the number of applications for use of the Speakers' Corner for events; (b) how many are rejected and for what reasons; (c) whether the restriction of public assemblies and events relating to the Israel-Hamas conflict at the Speakers' Corner is due to time-sensitivity given the recency of this conflict; and (d) whether this restriction will be lifted in the future.

Mr Speaker, Question Nos 1 to 34 on the Order Paper relate to the ongoing Israel-Hamas conflict. As these queries relate to the same subject matter as the upcoming Motion on "Solidarity, Security and Peace – the Israel-Hamas Conflict", which would be debated later today, I would like to seek your permission, Sir, on behalf of all the respective Ministers to whom the Parliamentary Questions have been directed, to provide answers to the questions during the debate on the Motion.

Given the strong public interest on this topic, we can expect Members to raise a similar range of questions and supplementary questions during the debate on the Motion. As there is obviously a lot of overlap, the Ministry of Foreign Affairs, together with the other Ministries, will provide a response to the queries on the Order Paper during the debate on the Motion, in order to address them completely and holistically.

Any Member who wishes to seek clarifications on the Government's response may also do so during the debate on the Motion. I seek your permission, Sir.

I give my consent.

35 Mr Saktiandi Supaat asked the Minister for Transport (a) to what extent can the recent surge in prices of Certificates of Entitlement (COEs) be attributed to speculation; and (b) whether LTA will consider implementing measures to curb such speculation by (i) reducing the transfer period for open category COEs to 30 days to ensure only genuine need-based participants engage in the bidding process and (ii) raising the deposit requirement from $10,000 to 50% or more of the COE price to further deter speculative bidding and uphold the integrity of the COE system.

36 Mr Liang Eng Hwa asked the Minister for Transport (a) whether the continued rise in the prices of Certificates of Entitlement will impact business costs and those who depend on their vehicles to earn a living; and (b) whether there are any measures that can moderate further increases in prices.

37 Ms Ng Ling Ling asked the Minister for Transport with Certificate of Entitlement (COE) prices continuing to rise (a) which segment of the population is expected to be most impacted; and (b) whether the Ministry will consider reviewing and modifying the COE system to better meet the needs of Singaporeans.

38 Mr Yip Hon Weng asked the Minister for Transport (a) in light of the increased supply of Certificates of Entitlement (COEs) in the third quarter of this year, whether there has been a further increase in the COEs used to register Private Hire Cars (PHCs); (b) if so, what proportion of the additional COEs was taken up by PHCs; and (c) whether the Ministry will consider a different policy approach on COE bidding by PHCs vis-à-vis cars used for personal purposes.

39 Mr Don Wee asked the Minister for Transport in view of the high Certificate of Entitlement (COE) Category C prices, whether the Ministry can consider providing additional support to SMEs with a turnover of less than S$100 million that need to extend the COEs of their commercial vehicles in order to continue their trade.

40 Dr Lim Wee Kiak asked the Minister for Transport (a) with the prices of Certificates of Entitlement showing no sign of abating, what is the anticipated impact on the current inflationary situation, especially in sectors reliant on vehicular transport; and (b) whether there are specific measures in the pipeline to mitigate such impact on sectors heavily reliant on transport for deliveries like food and groceries.

41 Mr Leong Mun Wai asked the Minister for Transport whether he can consider providing additional support to existing owners of commercial vehicles who require these vehicles to continue their trade in light of high COE Category C prices.

42 Mr Gan Thiam Poh asked the Minister for Transport (a) what is the total number of cars currently available for car sharing; and (b) whether the Ministry will consider increasing the allocation of cars for car sharing and exclude these from the bidding for Certificates of Entitlement to make car sharing an attractive option for the benefit of Singaporeans.

43 Mr Melvin Yong Yik Chye asked the Minister for Transport (a) whether the Government has data on the current percentage of cars in Singapore that are of shared car fleets, excluding taxis and private hire vehicles; and (b) if so, how much have such fleets grown in the past five years.

44 Mr Pritam Singh asked the Minister for Transport (a) in view of the position taken for commercial vehicles' growth and the significantly smaller road footprint of motorcycles in general, whether the Ministry has conducted any studies allowing for a marginal growth in the number of motorcycles on Singapore's road space management; and (b) if not, why not.

45 Miss Cheryl Chan Wei Ling asked the Minister for Transport in view of the increases in private hire car population and demand for such services, whether the Ministry will consider (i) mandating the number of hours that private hire vehicles must be on the roads to serve its purpose and (ii) tightening the conditions which enable personal cars to be converted for commercial usage, such as setting a limit on Category A COEs allowed for this conversion.

Mr Speaker, may I have your permission to take oral Question Nos 35 to 45 and written Question No 26 in today's Order Paper, as well as related questions that have been filed for subsequent Sittings?

Please go ahead.

Thank you. Sir, the Ministry of Transport (MOT) understands the concerns of Singaporeans regarding high Certificate of Entitlement (COE) prices. My residents and stallholders have also shared their feedback with me during my market and house visits. I thank Members for their questions on this topic.

My response will have three parts. First, I will recap why our zero-vehicle growth policy remains relevant, as the COE system is one of the policy measures, which supports this goal. Second, I will clarify some of the questions that Members in this House and the public have raised regarding how the COE system operates. And finally, I will explain the steps we have taken to address the concerns.

Let me start with our zero-vehicle growth policy, which is important for managing traffic congestion in land-scarce Singapore. We currently have about one million vehicles on our roads, including more than 650,000 cars. It is not tenable for our vehicle population to keep increasing, as it means that we have to either set aside more land to build more roads, or accept higher levels of congestion like what we see in many overseas cities.

The Government's aim is to build an accessible, inclusive and sustainable land transport system that meets the needs of all Singaporeans, while bearing in mind our two key constraints: land and carbon emissions. Roads currently take up about 12% of our total land and the land transport system accounts for about 15% of Singapore's total domestic carbon emissions.

Reflecting the views of many Singaporeans, we have adopted a "car-lite" strategy and placed mass public transport at the core of our transport strategy. Currently, 64% of peak-period journeys are made on public transport and we aim to increase this to 75% by 2030 as we expand our Mass Rapid Transit (MRT) network. Conversely, the percentage of car-owning resident households has fallen from 40% in 2013 to about one-third in recent years.

Mass public transport enables the greatest number of people to get to their destinations with the least land take and carbon emissions. With our current energy mix where the bulk of our electricity is generated using natural gas, a journey that is made on an electric vehicle emits 50% of the carbon compared to an internal combustion engine vehicle. However, if the journey is made using an electric bus, the carbon emission level drops to 30%. Using MRT is even better, as the carbon emission level is only 10% compared to an internal combustion engine vehicle.

To keep our buses and trains running, the Government subsidises public transport by more than $2 billion annually; and this translates to more than $1 in subsidies per journey. We are also expanding our public transport network significantly – an additional 100 kilometres of rail by 2035, which is almost 40% increase from our current network. Today, seven in 10 households are within a 10-minute walk of one of our 202 MRT and Light Rapid Transit (LRT) stations. By the next decade, it will be eight in 10 households. To achieve these improvements, the Government is investing more than $60 billion in the rail network this decade.

Besides mass public transport, we are also enhancing the first-and-last-mile options such as walking and cycling, as well as access to point-to-point (P2P) services offered by taxis, private hire vehicles and car-sharing vehicles. These provide options for Singaporeans who do not own cars, but may need to use cars as a service from time to time, for example to take family outings during weekends or to send their parents for medical appointments.

As Members are aware, the COE system is an allocation mechanism for our vehicle quota, to achieve the zero-vehicle growth policy. COE bidding takes place twice a month and the bid prices can fluctuate depending on the prevailing demand and supply. When demand is weaker and there is plentiful supply, prices will be lower. However, when supply is tight, like what we are experiencing for the past year, and demand is strong, prices will increase.

Over the last three quarters, or from February 2023 to October 2023, the largest driver of demand has been from Singapore residents. Three in four Category A (Cat A) COEs and two in three Cat B COEs were won by Singapore residents. In comparison, foreigners won 1% of Cat A COEs and 4% of Cat B COEs. It is clear that the increase in COE prices was not due to foreign buyers.

Some have asked if the high COE prices were caused by households who own multiple cars and whether we should impose additional taxes on such households when they purchase their second or subsequent vehicle. The percentage of multiple car-owning households has been reducing – from about 19% of car-owning households in 2012 to less than 15% today. This translates to just 5% of all households in Singapore, since about one-third of households own cars. Given the low proportion, demand-measures such as imposing additional taxes on foreigners or households that own multiple cars would have little effect on COE prices.

Let me now turn to car-leasing companies, which bid for vehicles that are then leased out as private hire cars (PHCs). These companies won about 21% of Cat A COEs in the last three quarters. This is lower than the 27% of Cat A COEs they won in 2022. In fact, in the most recent bidding exercise, car-leasing companies won only 16% of the Cat A quota. Their proportion of Cat B winning bids also reduced slightly from 24% in 2022 to 23% in the last three quarters. The data shows that COE prices have gone up in a period where demand from car-leasing companies has come down, so it is unlikely that they are the main factor for the increase in COE prices.

There are two categories of PHCs: self-drive PHCs and chauffeured PHCs. Both are available for rentals, but only chauffeured PHCs may be used to provide ride-hail services. As of September 2023, the total PHC population is around 78,000 – similar to what it was in end-2019. About two-thirds are chauffeured PHCs and the remaining are self-drive PHCs including car-sharing vehicles.

As of September 2023, about 53,000 individuals hold a PHC Driver's Vocational Licence (PDVL), allowing them to provide ride-hail services using a chauffeured PHC. Two-thirds of PDVL holders who made at least one ride-hail trip in September 2023 drive company-owned cars, while the rest drive cars owned by individuals, including their own vehicles.

Sir, as I explained earlier, PHCs and taxis complement mass public transport by providing Singaporeans with an alternative option for point-to-point journeys. The demand for P2P services is increasingly met by PHCs rather than taxis. Pre-COVID, PHCs provided around three out of every five P2P trips. This has increased to about two out of every three P2P trips as of September 2023.

PHCs therefore play an important role in ensuring the availability of P2P services for commuters. They also serve more individuals and households compared to private cars. In addition, PHCs allow our drivers to earn a living using their own cars or leasing from PHC companies. The Land Transport Authority (LTA) has started a review on the industry structure and regulatory framework for P2P providers to ensure that services stay relevant and are able to meet evolving commuter needs.

Mr Gan Thiam Poh and Mr Yip Hon Weng suggested having a separate COE category for car-leasing companies or treat them like taxis which do not have to bid for COEs.

There are trade-offs to having a separate COE category for car-leasing companies. Similar to taxis, the quota for this new category would have to be drawn from existing categories given our zero-growth policy. As PHC demand is still evolving and could vary from quarter to quarter, it is difficult to ascertain what is the exact quota required to meet the needs of drivers and commuters. If we move too much of the existing quota from Cat A and B to this new category for PHC companies, it will further reduce the supply in these categories and there is a risk that COE prices may spike further. On the other hand, if we do not move enough quota to the new category, drivers will end up with insufficient vehicles to rent and commuters could be affected by shortages in P2P services.

We will study if there are further options beyond COE bidding to address the concerns with car-leasing companies, recognising that PHCs do travel longer distances on our roads but they also serve an important function in providing P2P services for Singaporeans.

Next, let me turn to concerns over speculative demand, including by dealers, as raised by Mr Saktiandi Supaat. We have a suite of measures in place to discourage speculation. For Cat A and B, there are a number of restrictions. The Temporary COE (TCOE) bid must be made in the name of the buyer and transfers are not allowed. The TCOE is valid for six months, within which it must be used to register a vehicle, otherwise it expires and the bid deposit of $10,000 is forfeited. For Cat E, the validity period of the TCOE is shorter, at three months.

Specifically for Cat E, we have seen that the TCOEs are used to register vehicles, on average, within 14 days, way before the validity period of three months. Since January 2023, only one Cat E TCOE has expired. [Please refer to "Clarification by Senior Minister of State for Transport", Official Report, 06 November 2023, Vol 95, Issue 115, Correction By Written Statement section.]

This shows that the dealers are not speculating, but are bidding based on actual demand.

The large majority of bids for cars are clustered within a small range around the clearing price, with most bids being made within the final hour of bidding. This shows that bidders are closely monitoring the clearing price and making bids based on their willingness to pay, while not paying more than necessary. It is typically not in the interests of dealers to bid higher than what is necessary to win the bid, as they have to absorb the higher COE prices since they have committed to certain sale prices for their vehicles.

We will continue to closely monitor the COE market to detect speculative behaviour and, if necessary, we will introduce further measures to discourage such behaviour. The Government will also take enforcement action against dealers who make false claims or misleading representations to consumers on the nature of their transactions, for example, if they claim that consumers would have ownership of the motor vehicle with a 100% loan with no down payment when, in effect, consumers are merely leasing it from them.

Mr Speaker, let us move to the supply of COEs. Under a zero-growth policy, the number of COEs available for bidding is based on the number of deregistered vehicles. For Cat A, B and C, we are currently facing a tight supply situation because many of the existing vehicles have not reached the end of their COE period and are not due for deregistration. Looking ahead, industry players have correctly observed that the COE supply for these categories will increase significantly from the second half of 2024 before reaching the peak supply years from 2026 to 2027.

Large differences in the supply during the peak and trough years result in higher volatility in COE prices across different years, assuming demand stays relatively constant. A better outcome can be achieved for all stakeholders, while still allowing the COE system to play its role as an allocation mechanism, if we can reduce the peak-to-trough ratio, by using a "cut-and-fill" approach to shave off the future peaks and using the supply to fill the current troughs.

We have previously made several moves to reduce volatility in quota supply. Instead of just the preceding quarter, we now use the moving average of deregistrations in the four preceding quarters to compute COE quotas for the next quarter.

In May 2023, MOT announced that we will bring forward the quota from guaranteed deregistrations in the peak years. This has helped to increase COE supply over the last six months. On a quarter-on-quarter basis, Cat A supply increased by 11% in the second quarter and then 22% in the third quarter this year, while Cat B supply increased by 3% and 6% in the second and third quarter of this year respectively. However, demand has remained very strong and COE prices have continued to rise.

We will, therefore, do further cut-and-fill to bring forward more quota from the peak years to fill the current troughs, while maintaining our zero-vehicle growth policy. Last Friday, LTA announced that the supply for Cat A and Cat B quota for the fourth quarter of 2023 will both increase by 35%, compared to the third quarter. Industry players have welcomed this move, as the additional supply injection this time is more significant, compared what we have done in previous quarters.

I should also point out that the 35% increase in supply for both categories is larger than the proportion of bids won by car-leasing companies in the last three quarters. We will also ensure that the COE supply in the upcoming quarters will continue to increase in 2024 till the peak supply years in 2026 and 2027. As one motor dealer representative commented to The Straits Times, "more COE quota will be made available going forward. So, the message is quite clear. There is no need to rush."

With the increase in supply, we hope that COE prices would moderate. However, we know prices will also depend on market demand, and demand is not within the Government's control. I need to be upfront with everyone that it is not possible to predict how prices will move in the next few rounds of COE bidding, but I want to assure hon Members and the public that the Ministry of Transport (MOT) and the Land Transport Authority (LTA) are doing what we can to address the concerns. We will continue to closely monitor and explore ideas to improve the situation.

I will now turn to commercial vehicles. Mr Leong Mun Wai, Mr Don Wee, Dr Lim Wee Kiak and Mr Liang Eng Hwa asked about this segment.

Like Cat A and B, the quota supply for Cat C has also been rising in the recent quarters. It rose 58% in the second quarter and 66% in the third quarter. This has helped to moderate the Cat C prices, which have largely kept within the S$80,000 to S$85,000 range in the last few quarters, coming down from more than S$91,000 in March this year.

As LTA announced last Friday, the Cat C quota supply for this current quarter will increase a further 65%, compared to the third quarter of 2023. Similar to Cat A and B, I want to assure our businesses and commercial vehicle owners that the quota supply for Cat C will also continue to increase in 2024 and beyond, before reaching a peak in 2026.

Let me now turn to motorcycles, or the Cat D segment. Mr Pritam Singh asked about allowing a marginal growth in the number of motorcycles, given our approach for commercial vehicles and in view that motorcycles take up less road space. Mr Murali Pillai had raised a similar suggestion in this House in November last year and MOT had explained that we have no plans to increase the growth rate of motorcycles as part of our zero-growth policy.

It is true that motorcycles have a smaller footprint on the roads than cars. However, they can still contribute to congestion, as what we can see from the experiences of other cities. As individuals who own motorcycles may use them for both commercial and personal purposes, such use of motorcycles is similar to private hire cars, as compared to commercial vehicles which are used predominantly for business needs. The zero-growth rate policy, therefore, applies to both cars and motorcycles.

That said, the Government recognises that some Singaporeans rely on motorcycles for their livelihoods and there are also higher proportions of lower-income individuals among motorcycle-owners, compared to car owners. This is one reason why the Additional Registration Fees (ARF), road taxes and Electronic Road Pricing (ERP) charges for motorcycles are lower, compared to other vehicle types.

To safeguard against speculative bidding behaviour for Cat D COE, MOT introduced several measures in the last two years. These include raising the Cat D TCOE bid deposit to S$1,500 and reducing the TCOE validity period to one month. Cat D COE prices have come down from more than S$13,000 in November 2022 and have stayed at around S$11,000 in recent bidding exercises.

We will continue to study ways to improve the COE system for Cat D, including ideas which share the same intent as what Mr Singh and Mr Murali have raised.

Mr Saktiandi Supaat.

Mr Speaker, I would like to seek clarifications from the Senior Minister of State for Transport. With regard to the "cut-and-fill" approach, will there be any trade-offs in respect of the impact on the roads with this initial reduction of the peaks and troughs that the Senior Minister of State mentioned?

The second clarification is that I am glad to hear that LTA is looking at the COE market, in terms of speculative activities in relation to my Parliamentary Question, and I am wondering whether the Senior Minister of State can share a bit more about the possibilities on what are the measures that we can take to relook into the speculative activities going forward, on the side of car COEs.

Mr Speaker, I thank Mr Saktiandi for his two supplementary questions. First, on "cut-and-fill", he is right that there is a trade-off. And the trade-off is this: because when we do "cut-and-fill", we are effectively borrowing from the future. We are taking the supply in the future peak years and we "cut" this to "fill" the current troughs. So, we are borrowing from the future peak years, ahead of time, before these cars are actually deregistered. What it means is that, in the near term, we do have the risk of having more cars on the roads in the next few years, before the cars are deregistered during the peak years.

But this is a trade-off that we have to make in order to strike a balance between the volatility and to be able to do some "cut and fill" to raise the supply in the current trough years. And that is also why, because of this trade-off, we have to be quite calibrated and not overdo this "cut-and-fill", because there will be downsides in the short term.

Sir, on Mr Saktiandi's second question, this is not only by MOT and LTA, but we also working closely with the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) to closely monitor the situation and, certainly, if there are speculative behaviours that we need to take action against, we will do so.

Mr Leong Mun Wai.

Mr Speaker, the Progress Singapore Party (PSP) agrees that we need to control our vehicle population in Singapore. However, given the recent rise in the COE prices, we are concerned about whether the average Singaporeans will be squeezed out of car-owning opportunities very fast in the future. As a result of that, I would like to raise two supplementary questions to the Senior Minister of State.

In the recent announced COE quota increase of 1,614 additional COEs, the Government has allocated 863 to Cat B; 546 to Cat A and 200 to Cat C. May I ask what is the reason for the Government to allocate fewer COEs to Singaporeans who are in need and more to Singaporeans who can pay?

The second supplementary question is: would the Government consider scrapping the Open category altogether, because it tends to be for the bigger cars, and allocate the COEs in that category to Cat A and Cat C?

Sir, just to clarify factually for Mr Leong's first supplementary question, when we announced last Friday the additional supply that we are injecting for the different Cats A, B and C, is on top of what we had announced earlier in October. So, I would suggest maybe Mr Leong can add up the two numbers and he would then see very clearly that, since we started this "cut-and-fill" earlier this year, we have been allocating more additional COE supply to Cat A, and less so to Cat B overall. So, do not look at the 1,614 in isolation. Please add up also what we had earlier injected and look at the complete picture.

The second supplementary question that Mr Leong raised, the design of our system is that we have the different categories contributing to Cat E, the Open category, and then the people who bid for Cat E can then decide what cars they want to use it for.

If we look at Cat C, which is a question that Mr Leong has filed, because we have a growth rate of 0.25%, it is not zero-growth for Cat C. So, what happens is that the number of COEs that we transfer out of Cat C is still less than the number of new COEs that we have injected. So, the overall supply for Cat C has continued to rise, albeit less than if we have not taken out to transfer to Cat E. But the overall supply for Cat C has been increasing over the years.

We will continue to monitor the situation carefully. And what we have done recently, with the additional injections into for Cat C, I hope it will help our business owners.

Mr Gan Thiam Poh.

Mr Speaker, I have a few supplementary questions for the Senior Minister of State. First, will the high COE lead to fewer cars deregistering? Second, is there an increasing trend or decreasing trend for high-end cars purchased as a result of higher ARF that has been introduced? Third, are there any plans to change it to a usage-based system, that is to say, drivers will be charged based on usage?

Mr Speaker, has the higher COE prices in recent quarters resulted in fewer people deregistering? Maybe what Mr Gan meant was that they then extend their COEs. We are seeing some of that. That is the individual's prerogative because, all along, we have allowed this option that if you extend your COE by five years, then you cannot extend anymore; but if you extend by 10 years, we allow you to extend. It is an individual's decision. But when we look at it from a systems point of view, we have to bear in mind that most people do not extend their cars because we have a policy as well that if you extend your cars beyond 10 years, the road tax that you have to pay will be higher. So, what we have found is that the large majority of car owners, whether in years when the COE prices are lower, also including when years when COE prices are higher, most people do not keep on extending. They actually do deregister. So, that is the first point.

The second point about high-end cars, after we increased the ARF for the high-end cars, the luxury cars, we have actually seen a moderation in terms of people buying those cars. And if you look at car ownership system as a whole, beyond COE, that is why we have the ARF tiered in a very progressive manner. So, if you buy a more mass market car, typically it will be in Cat A; and for most of the cars in Cat A, the amount of ARF you pay will be a lot less than if you were to buy a bigger car and, certainly, a lot less, than if you were to buy a luxury car.

I am sorry. Can I ask Mr Gan to repeat his last question? Oh, yes, usage-based. Sir, we have already been using both. Our policies to control congestion require us to do both. So, we control the population of the cars through the COE system, but we also have ERP which manages the usage. As to whether we can look at the ERP policy, whether there is room to tweak this further? In the past, some people have suggested whether it is possible to tilt more towards usage and then, therefore, give us a bit more confidence on the car population side of the house. These are things that we can continue to review. But I do want to point out that there is a need for both tools. Because if you only rely on usage, it will not be adequate, it will not be enough; if you only rely on controlling the population, then you are also not achieving the optimal outcome. So, I think the best balance is to have both: control the car population, but also look at usage-based.

Mr Don Wee.

Speaker, many small and medium enterprises (SMEs) are facing manpower constraints and rising business costs which include the escalating COEs when they refresh their commercial vans. I am enlightened by MOT's consideration, as explained by the Senior Minister of State. Can MOT work with agencies, like Enterprise Singapore and PUB, to promote the application of schemes like the Enterprise Sustainability Programme and Energy Efficient Grant so that the SMEs can reduce the overall business costs via these schemes?

Sir, the short answer is yes, we have been doing so and we will continue to do so. There are different ways of helping our SMEs to reduce costs and to look at how to increase also on the other side, that means, it is not just the cost side of the equation, but also to help them to be able to increase their revenue and improve productivity.

Mr Liang Eng Hwa.

Sir, I have a question for the Senior Minister of State on the zero-vehicle growth policy which he mentioned, where we cap our vehicles at around one million on the road and the underpinning consideration is the road space as well as carbon emissions. So, can I ask the Senior Minister of State as we incrementally increase our road spaces and more vehicles are converted to EVs, will there be scope to review these numbers to have some growth when capacity can take it?

Sir, I think that will require a much larger review to look at what will best meet the commuting needs of Singaporeans and balancing the trade-offs very carefully. First, we need to recognise that we cannot keep on building roads. There is a cost to doing that because the roads will take up land. So, instead of building roads, if we could use the space that is taking up by roads for other purposes, it could generate more value for society as a whole.

One example I can share with Mr Liang and the House is that as part of the North-South corridor, because we are building this corridor and moving the cars underground and, therefore, freeing up some of the surface space. So, over the next few years as a project is being completed, we will go round and talk to different communities along this stretch of the North-South corridor to explore how we can make better use of the surface space that is freed up. So, instead of roads, we use it for gardens, community space, public spaces, cycling and walking. That is something which we need to bear in mind. There is a trade-off to building more roads to cater to more cars.

Second is: are there better ways to allow our people to still meet their commuting needs without necessarily having to own a car? That is one option, of course, that will still be available to some Singaporeans. But for the majority of households, which as I mentioned earlier, now only one-third of resident households own a car and two-thirds do not. So, the main mode will be public transport. I think what we can do to also meet their needs where on occasions they need the P2P service is to look at how we can also enhance point-to-point services and car-sharing services.

Mr Yip Hon Weng.

Mr Speaker, I thank the Senior Minister of State for his response. I just have a very short supplementary question which relates to my Parliamentary Question No 38. I thank the Senior Minister of State for sharing that LTA will study the issue of PHVs as well as P2P transport further. I just want to ask whether the Senior Minister of State can share what are the likely areas will be looked into under this study?

Mr Speaker, may ask if Mr Yip could state his question again? I am sorry. Thank you.

Mr Speaker, I note that earlier, the Senior Minister of State has shared that there will be a study looking into PHVs as well as P2P transportation. I would like to ask the Senior Minister of State whether he can share what are the likely areas that this study is able to go into that he can share with the House.

Sir, I thank Mr Yip for his question. We have just started this review not too long ago, but the purpose is to look at how we can further enhance the provision of P2P services. So, I would say it is not focused only on the COE issue, even though today we are here in this House talking about the COE issue right now. But this P2P review is actually a larger review looking at how P2P services can better meet the evolving needs of commuters. So, we will share more information with the House when the study is completed. We are now going through the different parts of it together with our tripartite partners.

Mr Xie Yao Quan.

Speaker, on Cat A versus Cat B supply, if we look at the car population statistics, beyond any bidding exercise or even in any given year, but if we look at the population level, in 2012, 55% of cars were Cat A. But this has fallen to less than 50% in 2022. So, that is what the statistics tell us. I just wish to ask the Senior Minister of State if the Ministry would consider redeploying some Cat B supply to Cat A, especially in the longer term. I believe that at least part of the demand for Cat B will not be fungible and, therefore, will not move to Cat A. So, net-net, I am asking if the Ministry would consider increasing Cat A supply, which should mean decreasing Cat B supply, but I believe for the benefit of a middle-income Singaporean household who may just need to own an entry-level car.

Mr Speaker, I understand where the Member is coming from. But I think we need to be mindful of the trade-offs when we make such a move. As we can see from the recent bids, there is a strong demand from Singaporean buyers for both Cat A and Cat B. So, in deciding how to re-allocate, we have to bear that in mind as well. It is actually the same kind of complexities that I explained earlier about why there are trade-offs to having a separate category for private hire cars. Because then, how do you decide how much to shift, to re-allocate? And if you do not do it correctly, it will actually lead to more negative outcomes for everyone.

Ms Hazel Poa.

Mr Speaker, I would like to seek two clarifications from the Senior Minister of State. Firstly, the Senior Minister of State mentioned that for motorcycles, he recognised that it is used for commercial purposes and for livelihood, but that it is similar to private hire vehicles and, therefore, no special considerations given. Can I ask whether MOT has done a study into what percentage of motorcycles is being used for commercial purposes, compared to private cars?

The second clarification is: does the Senior Minister of State have a breakdown of the percentage of COEs in the Open category that is eventually registered to the different categories? And when these COEs are being used to register, say, for Cat B vehicles, when it is deregistered, does the COE go back to the Open category or does it go to the Cat B category?

Mr Speaker, first, I need to clarify that I did not say that there are no additional support given to motorcycle owners. If Ms Poa had heard my speech correctly earlier, I said that we do recognise that some Singaporeans rely on motorcycles for their livelihoods and there are higher proportions of lower-income individuals among motorcycle owners compared to car owners, and that is why the ARF, road taxes and ERP charges for motorcycles are lower, compared to the other vehicle categories. So, just to clarify that point.

Sir, if I may just also add to earlier questions on the commercial vehicles. Our Light Goods Vehicles ARF is also set at a lower rate: 5% of open market value (OMV), which is much lower than cars as well.

So, we do recognise and we will, as part of the policy that we set, try and see how we can cushion and provide more help for these categories of vehicle owners, while not going against the fundamental principles that, ultimately, defines COE as an allocation mechanism, and we do need to allow the market to work to decide how to allocate the limited supply of COEs.

Sir, as for the motorcycles – it is actually not so straightforward because how do you consider whether this motorcycle is used for commercial or used for personal, when the individual actually uses it for both? And in different cases, and for different individuals, the proportion may actually change. Some of them do use it for commercial purposes from time to time, some of them use it more frequently, similar for PHCs that are owned by individuals. So, I think it is very difficult for us to tell for sure that this is the exact percentage.

But what we recognise is that the nature of how these motorcycles are being used is similar to PHCs because you use it effectively for dual use, unlike say, commercial vehicles, where it is mainly, predominantly for business needs.

Sir, the second question that Ms Poa raised about the Open category, I think I have explained earlier that this is a way for the system to be able to re-allocate, to better meet the demand from the car buyers. So, if the Open category bids are being won and it is being then used for a certain category, it actually reflects what the buyers, what the market demand is.

There are different ways of addressing the need for a more progressive system. But I would put forth to Ms Poa and to the House that COE, while there is an element of that in having Cat A and B, it is actually not the only tool that we have to achieve that progressive element in our car ownership system. Actually, the bigger, and perhaps more direct, tool is the ARF where you very clearly differentiate based on different OMV of the vehicles, how much ARF they have to pay, and it is tiered and progressive.

Mr Pritam Singh.

Just one question for the Acting Minister for Transport. How does the Government, or specifically LTA, determine at any given point what is the appropriate number of motorcycles on the road in view of the incomes of Singaporeans across the board? In the past, we have had situations where motorcycle COEs were transferred to Open category, for example. So, how does the LTA determine and regulate what would be the appropriate level of motorcycle ownership in Singapore?

Mr Speaker, Mr Singh is correct that previously, there was a transfer of the motorcycle COE to the Open category, but I think Mr Singh will be aware, that practice has now stopped. So, now it is not done for Cat D anymore.

The second point is that the total number of supply for motorcycles in view of the changing and evolving needs of the users, I think that is something which, as I pointed out in my reply, we are studying – whether they are ways to achieve a better outcome to reflect the intent of, I think what Mr Singh has in mind and what Mr Murali Pillai had raised earlier as well, but perhaps not going to the extent of treating them like commercial vehicles and having a growth rate. Because the risk of doing that is it then becomes a structural change and then, every year you will have an increase. And the downsides of road congestion that can be caused by motorcycles, even though they take up less road space, are still there.

But we will study the intent of what Mr Singh and Mr Murali Pillai had raised earlier to see what steps we can take on motorcycle COEs.

Ms Hazel Poa.

Thank you, Mr Speaker. I would like to ask the Senior Minister of State again. Just now, there was a question I asked which was not answered and that is when Open category COE is deregistered after being used to register for a certain category, when it is deregistered, does that COE go into Open category again or to the category that it was registered for?

Mr Speaker, if the Open category COEs is used for a particular category of cars, then when that car is deregistered, it will go back to that category. But there is a mechanism to then flow part of it back to the Open category, in order for the quota to be re-allocated again. That is part of the system design.

46 Dr Lim Wee Kiak asked the Minister for Health (a) whether he can provide an update on the Government's study on sodium taxes in countries where such measures have been implemented; (b) when will recommendations on potential policy changes arising from this study be put out; and (c) how does the Government intend to ensure that efforts to address sodium overconsumption do not inadvertently lead to increased business overhead costs and higher food prices.

Mr Speaker, the Health Promotion Board (HPB)'s National Nutrition Survey 2022 showed that our intake of sodium is excessively high, which significantly increases the risk for hypertension, which can lead to diseases such as heart attack, stroke and kidney failure. We need to cut down on our consumption of sodium urgently.

Other countries have faced similar challenges and the Ministry of Health (MOH) has studied what they have done. Chile has implemented regulations in 2016 to require food and drinks high in sugar, salt and saturated fat to have a warning label. You can find such warning labels on soft drinks, sauces, processed meats and so on, in Chile. Finland has also successfully used food labelling laws to reduce salt consumption over the past three decades. Hungary went further, as beyond identifying food items which have unhealthy levels of salt and sugar, it imposes a tax on it.

These are useful practices for us to learn from, but we do not intend to emulate any of these systems. For example, our Nutri-grade labelling measures for pre-packaged beverages has been very effective in bringing down sugar consumption. We should likewise tackle excessive sodium consumption in a way that is suited to our context.

In many European and Western countries, their main source of sodium is processed foods which households buy from shops or supermarkets. In Singapore, sodium comes mainly from added salt, sauces and seasonings, such as soya sauce, dark sauce, fish sauce and chili sauce, and we consume them most when we eat out.

A key priority is therefore to work with the manufacturers of salt and sauces. Today, HPB offers grant support to salt and sauce suppliers to reformulate their products, through the Healthier Ingredient Development Scheme (HIDS). As a result, lower-sodium alternatives are now more accessible. Today, the wholesale price of most lower-sodium salt, sauces and seasonings supplied to food operators are comparable to that of regular versions. To date, HPB has garnered the commitment of 15 major manufacturers and food operators, representing over 30% of the retail market for sauces and seasonings and 10% of the F&B market share, to increase the variety and demand of lower-sodium ingredients.

The other stakeholder to engage are food operators such as hawkers, restaurants, caterers and chefs to promote the adoption of lower-sodium ingredients. We will have to explain to them the need to cut our sodium intake, introduce them to lower-sodium ingredients, as well as provide them with samples that they can try out so that we can get them to use these products. We also hope that they will help us explain to the public that salt is an acquired taste and that if we over-consume it over some time, our taste buds will get accustomed to it and fail to taste other natural ingredients. We are planning a series of engagement sessions with them, including with the industry and professional associations.

Finally, HPB will also be stepping up its public education campaign. In Singapore, less salt often means more taste as it allows us to appreciate the natural flavours of the herbs, spices and other ingredients typically used in local cuisine. HPB will continue to educate Singaporeans on the need to cut sodium, increase their receptiveness to using lower-sodium ingredients and change the perception that we need more salt and sauces for flavourful dishes. It will conduct more activities, such as food sampling activities at supermarkets.

Dr Lim.

Sir, I thank the Senior Parliamentary Secretary the reply. I would like to check what is the price differential now between potassium salt versus sodium salt currently in the market? I mean, after all the efforts that you have done, does HPB know what is the number of households that have switched over to potassium salt?

And on the impact on businesses, she mentioned a grant was given for the food processing businesses for them to use potassium salt for their products. How much grant has been issued and what are the plans to promote this scheme further, including to the households as well?

I thank the Member for the questions. I do not have the specific numbers and the data that the Member has requested. But if he so wishes, he can file another Parliamentary Question and I can provide information.

I want to explain that we are cognisant of the concerns of consumers, especially in relation to the cost, as we move to the lower -sodium products. And we actually take a multi-pronged approach and an upstream approach in this to ensure that various stakeholders are with us and therefore will help alleviate the issues of cost.

Firstly, as I mentioned, the HPB has been offering grant support to suppliers to reformulate their products through the HIDS and this includes salt and sauce suppliers. With this grant, the wholesale prices of low-sodium salt, low-sodium sauces have actually reduced. Actually, all of the low-sodium salt is comparable now with the regular salt and half of the low-sodium sauces supplied in the market are comparable to the prices of the regular products. And now, we are still working on how we can enhance existing schemes further so that we can narrow this price differential even further especially for the low-sodium sauces as compared to the regular sauces.

Secondly, we are also now involving the different suppliers on board to supply the lower-sodium salt to the food sectors and actually, in total, these three suppliers supply close to half of the food service salt market share. That includes 250 hawkers, coffeeshops and food courts island-wide, as well as about 150 caterers that are already using the lower-sodium products. So, if there is anything to go by, these are healthy numbers which show growing appreciation and support for these efforts, and HPB has also garnered the commitment of major manufacturers and leaders in the food service sector to reduce sodium in their products and their food. So, this I think is something that we are going to continue to build on.

The third prong of this effort is, of course, our public education and that is important because it is not just the upstream and the supply but also public. So, there is going to be efforts that we are going to be complementing. As I mentioned earlier, there are going to be campaigns. There has been actually a campaign, and this is a multi-year public education campaign to raise awareness of the effects of high sodium intake, educate public on the available lower-sodium alternatives and ways to actually replace salt totally without compromising on taste. So, we are looking at a multi-pronged upstream effort, which we hope will then change the ecosystem and have everybody on board in this effort.

Dr Lim Wee Kiak.

Thank you, Sir. As a follow-up question – will the food labelling of low-sodium food products and sauces be made mandatory? Or the other way around: will high-sodium food warning signs and labels be made mandatory?

As how we had approached it with the lower sugar effort, I think we are going to look at the market and see how we can do this better. It will probably come in phases because, as the Member knows, we need to prepare the operators and the providers as well. So, this is something that we will announce as we roll it out and hopefully, we bring the whole community with us on this.

Ms He Ting Ru.

Thank you, Mr Speaker. Just one supplementary question based on the Senior Parliamentary Secretary's answer. I just wanted to check, the Senior Parliamentary Secretary mentioned this grant that is made available to producers to introduce alternatives or manufacturing processes to lower the sodium input into the products and the food that eventually comes out. I am just wondering what is the uptake rate of this scheme? How many producers have actually been granted and what is the size of the average grants, and what are the efforts to be made to encourage more producers to take up this grant in order to reformulate some of the manufacturing processes?

Thank you for the question. As I explained to Dr Lim earlier, I do not have the specific numbers and data here and I will be happy to answer the question if the Member files an additional question. But earlier, I also alluded to the different numbers and the different parties that we have been working with and the uptake on that front. We are continuing in these efforts.

I think this is all hands on deck and a multi-pronged approach, upstream approach on this. If we do work with the suppliers, the costs then need not be transferred to the hawkers, to the restaurants, all consumers will also not be affected.

So, I hope that something is that we can get Members to also continue to share and encourage – these are different groups that we are talking about. We are working upstream, but at the same time, we also need the community to avail themselves to some of these products. Because as you know, when there is a higher demand for healthier food, for low-sodium options, this will also encourage the food service providers to move towards this direction. So, I hope that there will be a whole-of-community support in this effort.

47 Mr Desmond Choo asked the Prime Minister (a) whether the recent digital banking disruptions by large local banks on 14 October 2023 are within MAS' expectations; (b) what has been the cost to consumers and business entities reliant on such banking services due to the recent disruptions; and (c) how will MAS ensure that consumers and business entities are given early warning of such service disruptions.

48 Ms See Jinli Jean asked the Prime Minister whether MAS will consider (i) imposing user-centric accountability measures on banks such as the requirement to publish service reliability reports of digital banking services and proactively engage customers on service recovery and alternative options during outages and (ii) requiring banks to compensate their banking customers who suffer financial losses due to outages.

49 Ms Poh Li San asked the Prime Minister with regard to the disruption to the digital banking services of DBS and Citibank on 14 October 2023 (a) whether MAS has any data on how many (i) customers and (ii) businesses have been affected; and (b) whether local banks are required to maintain robust levels of redundancy in critical banking infrastructure such as the data centre that is maintained by third-party service providers.

50 Mr Ang Wei Neng asked the Prime Minister (a) what lessons can be drawn from the recent disruptions to digital banking services of DBS and Citibank, in view that these occurred despite MAS' tightened Business Continuity Management (BCM) guidelines for financial institutions to better manage such disruptions; (b) whether MAS will consider regulating data centre service providers that serve major financial institutions in Singapore; and (c) how does MAS plan to tighten the oversight of its BCM guidelines on financial institutions in Singapore.

51 Mr Leong Mun Wai asked the Prime Minister (a) whether the Monetary Authority of Singapore (i) conducts regular inspections and off-site reviews of outsourced parties to handle critical IT and infrastructure systems for the domestic systemically important banks (D-SIBs) and (ii) assesses the impact of outsourcing on the resilience of D-SIBs' IT infrastructure; and (b) if not, why.

52 Mr Desmond Choo asked the Prime Minister (a) how does Singapore's penalty framework on digital banking disruptions committed by financial institutions compare with other large financial centers overseas; and (b) how effective have the penalties been in improving such service reliability.

53 Ms Jessica Tan Soon Neo asked the Prime Minister with the greater reliance on digital services for payment and other financial services and in light of the impact on consumers due to recent disruption of banking services, whether MAS will be requiring financial institutions and their service providers to take further measures to strengthen the resilience and reliability of their digital services.

54 Mr Chua Kheng Wee Louis asked the Prime Minister whether the Government has put in place minimum redundancy requirements and monitors concentration risk in the use of data centres by key local financial institutions.

Sir, may I have your permission to answer all the Parliamentary Question (PQ) nos 47 to 54 in today's Order Paper, as well as the questions filed by Members for subsequent Sittings relating to the banking services disruption of DBS and Citibank on 14 October 2023?

Please proceed.

Thank you, Sir. If Members are satisfied with the response, they may wish to withdraw their questions after my response.

Let me start with the causes and impact of the disruption on Saturday, 14 October 2023. DBS and Citibank experienced system outages in the mid-afternoon of 14 October 2023, which affected their banking as well as their payment services. These outages were caused by a malfunction of the cooling system in the data centre hosting both DBS' and Citibank's IT systems. These IT systems support the delivery of retail and corporate banking services. The temperature in the data centre rose above the optimal operating range, causing the banks' IT systems to shut down.

To restore the impacted services, DBS and Citibank immediately activated their IT disaster recovery and business continuity plans. However, both banks encountered technical issues which prevented them from fully recovering their affected systems at their respective back-up data centres: DBS due to a network misconfiguration and Citibank due to connectivity issues. Services at DBS and Citibank were progressively recovered from 8.21 pm and 7.05 pm respectively on 14 October, but only fully recovered in the early hours of 15 October.

The impact of the service outage was wide. Up to 810,000 attempts to access the digital banking platforms of both banks were estimated to have failed between 2.54 pm on 14 October 2023 and 4.47 am on 15 October 2023. Approximately 2.5 million payment and ATM transactions could not be completed. DBS reopened its branches from 5.30 pm to 9.30 pm on 14 October to assist affected customers. Both banks provided updates via their social media platforms.

Let me now address the Monetary Authority of Singapore (MAS)'s requirements on: one, banks' business continuity; two, IT infrastructure resilience; three, their outsourced services involving critical IT systems. MAS requires banks to establish IT disaster recovery plans and to test these plans regularly. Banks must conduct disaster recovery exercises with their back-up data centres to validate that critical systems and services can be restored within four hours of an outage. The unscheduled downtime for a critical system affecting a bank's operations or service to customers must not exceed four hours within any 12-month period.

MAS does not oversee banks' external service providers, which are typically not financial institutions. This is similar to the approach taken by regulators in other major jurisdictions. The onus is on the banks to ensure that the external service providers they appoint to support their operations or service to customers, can meet MAS' requirements on operational resilience. MAS also requires banks to maintain close oversight of the external service providers, so that they can deliver services with minimal disruptions.

DBS and Citibank have fallen short of MAS' requirements to ensure that their critical IT systems are resilient against prolonged disruptions. While both banks conducted annual exercises to test the recovery of their IT systems at the back-up data centres, the specific issues that led to the delays in system recovery on 14 October did not surface during those tests.

I will now elaborate on the accountability and remediation measures taken to uphold the reliability and recoverability of banking services.

First, accountability and holding banks accountable. Under the Banking Act, MAS can impose a fine of up to $100,000 on financial institutions found in breach of MAS' requirements on technology risk management. With the passing of the Financial Services and Markets Act in 2022, which will progressively come into force next year, the fine quantum will be increased to a maximum of $1 million. The fine quantum is consistent with existing local penalty regimes, such as those under the Telecommunications Act and the Personal Data Protection Act.

Besides fines, MAS uses a range of regulatory tools to address lapses in banks' risk management. This includes additional capital requirements and suspension of specified businesses or activities. In May 2023, in response to repeated outages, MAS imposed a multiplier of 1.8 times to DBS' risk weighted assets for operational risk. This translated to approximately S$1.6 billion in total additional regulatory capital at the time. Holding additional regulatory capital comes with costs for the bank. It increases the cost of capital and it is a key metric that drives business decisions such as dividends and investments. It is a drag on the return on capital, which could in turn impact credit ratings as well as the stock price of the bank.

Banks are also accountable to their customers, but matters of compensation are better dealt with between the bank and its customers as it would be highly dependent on individual cases and circumstances. MAS expects banks to have a fair process to deal with this.

Second, remediation. MAS has instructed both DBS and Citibank to conduct thorough investigations into the root causes of the incidents that occurred on 14 October, as well as to put in place remediation measures to minimise future disruptions and outages and to strengthen their recoverability in the event of an outage. In addition, the banks are required to provide to MAS, regular system availability reports relating to their critical systems. MAS will also work with the financial industry to incorporate key learnings from these incidents into all banks' risk management controls, MAS' future technology risk supervisory approach as well as the next financial sector business continuity exercise, which is scheduled for 2024.

MAS has adopted a tougher stance against DBS because it experienced five disruptions to its banking services in the last eight months. This is unacceptable. As directed by MAS, DBS convened a Special Board Committee earlier this year to oversee a full review of its IT resilience by an independent external expert. The review was completed in August and DBS has set out a technology resiliency roadmap to address the findings and to improve system resilience.

To ensure that DBS keeps a sharp focus on restoring the resilience of its digital banking services, MAS has prohibited DBS from making any non-essential IT changes or acquiring any new business ventures for a six-month period. There must not be any distractions that take away the needed resources and attention by the bank to strengthen its technology risk management systems and controls. MAS has also barred DBS from reducing the size of its branch and ATM networks in Singapore until MAS is satisfied with the progress of DBS' remediation.

Another dimension of remediation has to do with data centres, which host the IT systems of not just the banks but also other critical sectors. The Government is studying ways to further strengthen the security and resilience of data centres, where lapses could result in a significant impact.

Finally, contingency. Contingency measures in the face of banking disruptions are key. No IT system is infallible. Disruptions can occur for a variety of reasons and can happen without warning. When they do occur, MAS expects banks to take prompt action to reduce inconvenience and costs to customers. This includes being proactive and transparent in updating affected customers on the status of service recovery and alternative services.

While our banking system is generally robust, customers too must plan and prepare for contingencies. They can benefit from having alternative payment options and not be over-reliant on one provider for time-sensitive transactions. Indeed, during the recent service disruption, customers who were able to switch to alternative payment methods or providers or use cash as a last resort would have been less affected.

Mr Speaker, the digitalisation of financial services has brought significant conveniences to the public. While some disruption from time to time is unavoidable, we expect financial institutions to build and strengthen their capabilities to safely recover from any disruption within a reasonable time period. Where financial institutions fail to do so, as with this incident, MAS will work with them to thoroughly investigate the incident, apply lessons learnt in our supervisory oversight of the financial industry and take necessary action to further strengthen the resilience of financial service delivery.

Mr Desmond Choo.

Mr Speaker, I have two clarifications for Minister of State Tan. I want to thank the Minister of State for reassuring us that there is a good plan laid out to strengthen our banking system.

The first supplementary question is, over the last eight months as the Minister of State had pointed out, there were different parts of the digital banking system that has failed. Is the regulatory regime sufficiently tough enough of a deterrence to get the bank to focus its attention on strengthening the system? Because quite certainly, the non-essential items that were proposed, for example, merger and acquisitions (M&As) really depends on whether they have any in the pipeline. If they do not, then this will be nothing short of a slap on the wrist. How do these punishments compare to what we have in regimes overseas?

The second one is, through the course of the last eight months, there were various breakdowns. Certainly, DBS would have the system to warn consumers and users of the banking system, that there was a possible disruption and they should prepare for alternative ways of conducting business. Because many consumers were caught out – some of them were in restaurants, some of them were running their businesses. But they were not warned of these until they had to start to pay. Nowadays, we get alerts quite frequently using the app or SMSes. Is this something the MAS will get DBS to consider?

Sir, I thank the Member for his supplementary questions. First of all, I want to reiterate that: one, the banks have fallen short of MAS' requirements and expectations; two, that the outages and the length of time that are required to restore services are unacceptable; and three, the banks and the financial institutions involved are being held accountable. How so? First, I mentioned earlier on that DBS is required to hold regulatory capital. Members will know that this will be at great cost to the bank, as I had mentioned earlier on.

Second, they are also other measures. The bank, or DBS in this case, is not allowed to make any IT changes and also to involve themselves in any acquisitions, and the third, is that they are not to decrease the number of physical ATMs and branches.

If you look at these as a whole, there is an impact on the banks in terms of regulatory capital that is costly to the bank – that is one. Second, in the whole suite of measures, this is meant to allow for them to focus all of their attention into this – that they have the time, attention and resources to focus on this.

The third aspect of it, is to slow down the reduction of the number of ATMs and branches is also critical. Because while we want to be digital-first, in our approach to digitalisation, we cannot be digital-only. And therefore, all of these measures are, we think, at this point in time commensurate, but we will review them.

If the banks' response and mediation measures are not adequate, MAS will take further necessary actions to ensure that that is so.

Mr Ang Wei Neng.

Thank you, Speaker. I thank the Minister of State Tan for the very comprehensive reply. First, I would like to congratulate DBS for making record profit in the first half of this year, at more than $5 billion, which is a 45% rise compared to the same period in the previous year.

However, we note that DBS' IT and banking system has continued to have a lot of disruptions, despite the additional measures imposed by MAS, including the increase in capital requirement. So, that does not have a big impact on them. I would like to ask the Minister of State, will MAS consider asking banks with these sort of disruptions to compensate directly to the bank customer, as that may have more impact than what MAS has imposed?

I thank Mr Ang Wei Neng for his supplementary questions. As I mentioned earlier on, the banks are and will be held accountable. First, through MAS' actions – which I mentioned and went into detail on – how imposition of regulatory capital will impact the banks; in addition, it will be a drag on the return of capital, it could impact their credit ratings and it could impact their stock price. That is one.

DBS, on its own, also has acknowledged that the bank had fallen short of expectations and that senior management will be held accountable. This is in line with MAS' expectation for incentive structure, the bank's incentive structure to promote accountability. The bank will reflect this in its year-end compensation process.

So, all of these in concert is meant to send a very strong message that this is unacceptable and that we are holding banks accountable. But it does not stop there.

The review will take place. We will look at what the banks have put in place during this period, how they are remediating, how they are fixing, how they are restoring this and, if necessary, we will have more – MAS will impose, potentially, more measures as necessary.

Thirdly, consumers also will hold banks accountable. If I am unable to pay using one of the financial services providers, then I go to the other one; and if I lose confidence in one, I go to the other one.

So, I think number one, MAS will and is holding the banks accountable; two, the bank is holding itself accountable; and three, consumers can also hold the financial institutions accountable.

Ms Jessica Tan.

Thank you, Mr Speaker. I just have one clarification for Minister of State. He mentioned in his reply that the two banks had done their testing – they had the plans, they had done their testing. But despite the testing, which was done annually, these errors did still occur and these errors were impactful to users.

So, is there a need to review the kind of testings and the requirements for the reporting of those testings, or further measures to be taken to ensure reliability?

I must thank the Minister of State for the earlier reply also, because I thought it was quite comprehensive. But it still requires the banks to adhere and also to ensure that the level of adherence is done.

Sir, I thank Ms Jessica Tan for her question. I think she raises a very important point. Let me take this in some detail.

First, DBS' review; second, Citibank's review and then what MAS expects of all financial institutions, learning particularly from this incident, but also learning from the disruptions by financial institutions over the course of the last year or so.

First, DBS' review, which was completed just a couple of months ago in 2023, has four pillars: first, technology risks, governance and oversight; second, incident management; third, how do you strengthen your system's resilience; and fourth, change management. So, DBS is undertaking this and they will look into this in detail.

Second, for Citibank, MAS will assess the supervisory actions to be taken against Citibank following the conclusions of the investigations in the 14 October incident.