HEAD R - MINISTRY OF LAW

Head R – Ministry of Law

Opening up of legal sector

Mr Alvin Yeo (Hong Kah): Sir, I beg to move,

That the total sum to be allocated for Head R of the Estimates be reduced by $100.

It has been about two years since the Government sweeping measures to liberalise the legal sector. A measure that attracted the most headlines was to allow foreign law firms to apply for Qualifying Foreign Law Practice (QFLP) licence which would allow them to practise Singapore law in corporate and financial transactions. The key reason for this was to support the growth of Singapore as a financial centre and by staunching a brain drain of our local legal talent through creating opportunities for them to gain international exposure in corporate law without having to leave our shores.

I should declare my interest as a member of the Committee chaired by Justice V K Rajah which made those recommendations, which were subsequently accepted by the Government. So I do support this liberalisation. But the question arises: have these measures borne fruit thus far and what lies ahead?

I would like to ask the Minister, since the QFLP licences were awarded at the end of the 2008, whether this move has led to positive benefits for the financial sector. I appreciate that it may be difficult to come up with quantitative data, especially for 2009, which was a recession year. But have we at least obtained feedback from banks and corporates that this has led to greater breadth and depth of legal services available here, or that the one-stop shop concept of an international firm, which can also cover Singapore law issues, has materialised and delivered better service to its end-users?

Again, in terms of keeping our local legal talent, in particular those more interested in corporate law rather than litigation, have we witnessed more Singapore lawyers coming back to practise in international firms based here, or seen few of our lawyers leaving Singapore to pursue legal careers elsewhere? I think it is essential for us to track this as the liberalisation measures were debated long and hard and essentially adopted for the greater good of the country. If the hoped-for returns are not forthcoming, we need to ask if some modification or tweaking of the scheme is in order to try and meet the objectives behind it.

At the same time, I do hope that our own Singapore law firms are not overlooked. This is because we need our own strong local institutions who are steeped in our national culture and values, those who will not close their offices here when times are hard or when they are directed to by head offices thousands of miles away. This is much the same thinking that the Government had in liberalising the banking sector when it is stated that it hoped that Singapore would have two strong local banks which would stick by Singapore through thick and thin. The fact that we have three such banks now is a bonus.

At this juncture, I should further state my interest as a partner in a Singapore law firm as indeed are several other Members of this House. The concern here is that the top talent in corporate law and the cutting edge corporate transactions, for example, the large M&A deals, the major financings, the high profile projects, would gravitate to the international firms which can now practise Singapore law in those areas. What the Singapore law firms would be left doing would be mainly litigation and property conveyancing. An analogy may be drawn with Hong Kong where the perception is that corporate work is dominated by the international firms.

As the domestic market is being evaded by the international players, the local firms must spread their wings overseas. But penetrating an overseas market is not easy at the best of times and usually takes years. The international law firms have the size and financial resources to make those investments, the local firms less so. So how can the playing field be levelled up? For a start, it would be good if our leading local corporates, including Temasek-linked companies, could give Singapore law firms an opportunity to pitch for their work, both here and overseas. I do not mean to call for some kind of ruling or edict that the project must be awarded to a Singapore law firm at all costs. The award of any work must be decided on merit but the opportunity to bid for and be considered for the assignment would sharpen the competitive instincts of our local law firms. It would be further encouragement for our local firms if our own corporate clients did not discriminate against them when it comes to legal fees as anecdotal evidence suggests that they bargain less, and less hard, with foreign law firms.

I would also propose that the Ministry look into further financial incentives for local firms to market their services and open offices abroad. This is really the only way to develop an overseas market. But Singapore law firms are often deterred by the substantial costs. Allowing double deductions or extra allowances for such expenditure to open overseas offices would, in my view, encourage more firms to take the plunge. This is more effective than a concessionary tax rate on profits from overseas offices because, to be frank, most overseas offices result in losses for the first few years.

And if all else fails, perhaps the Government should re-look at the question of whether to permit local firms to merge, in the full sense of the word, with foreign firms. Ironically, this will better preserve their local identity as the local office in Singapore may have 50 or 100 or more lawyers who would form part of the merged firm, as opposed to an international law firm merely cherry-picking those two or three lawyers they need to complement their staff here. Nor should these permitted mergers be limited to United States or United Kingdom firms as the dawn of the Pacific Century may mean that the merger with a Chinese or an Indian firm is the way to go. I do hope the Minister would consider all suggestions in our drive to make Singapore the preamble legal centre in Asia if not beyond.

International arbitration

On the Singapore International Arbitration Hub, the recent opening of Maxwell Chambers, a dedicated centre for hosting arbitration hearings and the inaugural Singapore International Arbitration Forum at which our Minister gave the keynote address, marked a milestone in our development as a centre for international arbitration.

From the days long-gone by when many lawyers were unfamiliar with even the concept of arbitration, through the times when our Courts were perceived to be anti-arbitration, Singapore is considered by many to be rivalling Hong Kong as a venue for arbitrating Asian disputes. Indeed, some observers think we have overtaken them.

The benefits of these are obvious. Quite apart from the direct economic returns from companies briefing our lawyers for arbitration and overseas visitors staying at our hotels and patronising our shops and restaurants, it cements Singapore's position as a centre for legal excellence and where the rule of law applies. This has an intangible effect but no less real on the internationally-held view that Singapore is a good place to do business.

What else can we do to spur the growth of Singapore as an arbitration centre? The refurbishment of the building which is now called Maxwell Chambers as a venue for hearings has drawn rave reviews from users. We clearly have the hardware in place but we still need to look after the software.

Arbitrations fall into two main categories – those administered by an institution such as the International Chamber of Commerce for our own Singapore International Arbitration Centre and those who are not administered which are termed " ad hoc " arbitrations. Parties and ad hoc arbitrations are free to set their own rules and procedures for those proceedings. But the Government still needs to make sure that the legislative framework properly supports these arbitrations. That means they need to monitor developments in the arbitration space and be ready to make changes as they did following the court's positions in cases such as the John Holland, Jeffrey Tang and Dermajaya Properties cases.

As for institutional arbitrations, there is less we can do to change the rules and policies of international organisations like the ICC. But we can and do need to keep our SIAC Rules in tune with the needs of the international community. These include dealing with current thorny issues like joinder of non-parties, consolidation of proceedings and electronic document production.

One other aspect to be looked into are arbitrators' fees. This is important in winning over parties and international arbitrators towards using the SIAC. There have been concerns raised about the SIAC's scale of fees and its ad-valorem basis and whether it provides sufficient flexibility for arbitrators who have different billing practices.

The internalisation of the SIAC's Board by appointing leading foreign lawyers was the right move to take the SIAC through the next phase of its development. The review of its rules, which I understand is being currently undertaken by the Board, is the next important step to keep the SIAC relevant and flexible enough to gain a greater market share of international disputes.

The promotion of Singapore as a neutral and arbitration-friendly regime is another vital initiative to persuade foreign partners to select Singapore as the venue for their arbitrations. Just last month, there was an SIAC conference held in Mumbai, and which our Minister spoke, which serves to spread the word of the virtues of basing your arbitrations in Singapore and the depth of expertise available here. We need more such conferences and seminars, not just in Mumbai but in Delhi, Beijing, Shanghai, Dubai and Hanoi, to name but a few. So the Minister for Law will be kept busy in his travels. In this way, we can position Singapore as the venue of choice in Asia for arbitral disputes.

Our Singapore law firms are also emerging as players in the international arbitration arena, not just for arbitration held in Singapore but those outside as well. To encourage them to grow their practices, this year's Budget extends a concessionary tax rate on incremental profits for such activities. However, my concern is that this measure does not go far enough. To grant this concession only on incremental profits requires law firms to go through the classification of fees derived from qualifying and non-qualifying activities over the last few years which is not straightforward. Further, it penalises law firms that had already invested in these practices and started to derive substantial revenues from them even before this year's Budget. One can give any number of rationalisations for this limited concession but my point is that it is simply not attractive enough. It would drive more firms to devote their energies towards developing an international arbitration practice if all profits from such activities qualify for the concessionary tax rate. But in order to ensure that the concession met its objective, it could come with a sunset clause, say, five years, whereupon it could be reviewed to see if it should be extended, discontinued or modified.

Mr Chairman, the Government has made the right moves to develop Singapore as an arbitration hub and the process is there for all to see. We need to keep on being proactive and making adjustments to stay ahead of the competition and enhance the attractions for foreign parties to have their international disputes resolved here.

International arbitration hub

Mr Christopher de Souza (Holland-Bukit Timah): To develop Singapore into an international arbitration hub, the Government has put in place a slew of measures and projects. These include developing a strong arbitration capability and establishing the Maxwell Chambers, a world-class integrated dispute resolution complex. But in order to make Singapore truly an anchor for international arbitration, we will need to convince commercial entities to build into their contractual and commercial ageements dispute resolution clauses which state that Singapore should be the seat for arbitration and Singapore law the choice of law. How would the Government partner the private sector to help achieve this?

3.45 pm

Compensation for land acquisition

Mr Zainudin Nordin: Sir, the compulsory acquisition of land has always been a delicate issue and is increasingly sold nowadays in the context of a rapid growth and changes in land use. Our Government is under pressure to deliver public services in the face of an already high and growing demand for land with just 710 square kilometres to apportion among competing land users and a population of five million to house. Planners and developers in Singapore are constantly challenged to introduce measures to optimise land use for Singapore's physical and infrastructural development. Under certain circumstances, the public interest will demand that privately held land be surrendered for the greater good of the community. This process of compulsory acquisition by the State is premised on demonstrating full transparency on the need for acquisition and the payment of a fair price to the appropriate owner.

Over the years, Land Acquisition Act has been amended to fulfil this premise. Despite all of this, there are still real challenges faced when it comes to convincing landowners of the land acquisition. The common hurdles are usually in the area of the land to be acquired, the compensation allowed for the land and upon apportionment of the compensation among the interested parties. Not surprisingly, the main contention is always the value of the acquired property.

Sir, to facilitate the development and project implementation by the various Government agencies, can the Ministry of Law update on the policy and the assessment of the need to support Ministries and Government agencies to acquire land for State development? Furthermore, how do we ensure that acquisition of land and premises are done in a fair, equitable manner and reflecting market value without delaying the total acquisition and transaction? Has the philosophy of land acquisition evolved over time? We need to ensure that the rules are in place to provide reasonable constraints on the power of the Government to compulsorily acquire land. This will in turn strengthen the confidence of the people in the justice system, empower people to protect their land rights and increase the possession of tenure security.

Criminal procedure code

Mr Christopher de Souza: Mr Chairman, Sir, the Penal Code was recently overhauled. The overhaul was timely and reactive to the changing nature of how crime and criminal activity are conducted. However, to augment these substantive changes, what is also needed is modern criminal procedure. Hence, an amended Criminal Procedure Code (CPC) should serve to enhance the good work that was done in the overhaul of the Penal Code. I would like to ask the Minister for an update on the amendments to the CPC.

Community sentencing options

Dr Mohamad Maliki Bin Osman: Sir, with the 2009 amendment of the Criminal Procedure Code, the courts have greater flexibility in using community sentencing options for minor offences. This is indeed a positive direction in making Singapore a more forgiving and compassionate society.

Sir, among the community sentencing options available include the community service order, conditional discharge, day reporting order, mandatory treatment order and short detention order. All these options imply that our resources traditionally associated with incarceration can be saved.

There is pressure for more resources in the community to support the rehabilitation and treatment needs of the offenders. For example, are there enough helping professionals in the community to handle the mandatory treatment order cases? Counsellors and social workers in the community are already so stretched handling a myriad of cases. Is the social service infrastructure ready for such orders both in terms of professional capability and resource availability?

The outcome indicators of these community sentencing options must be a sense of remorse and more pro-social behaviour of the ex-offenders. Who monitors the process and outcomes of these sentencing options? How does the Ministry of Law plan to evaluate the effectiveness of these options?

Pro Bono spirit amongst lawyers

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A] As Singapore develops into a legal service hub, we should not forget the lower-income group who cannot afford the legal expenses. They should have access to legal services, too, if they need them. They may need legal advice on disputes with family members, neighbours or over business matters.

Mediation at the Community Mediation Clinics (CMCs) has helped solve many social problems associated with legal disputes. CMC's work is very commendable. What else can we do to help the lower-income people facing legal problems? I am pleased to note that residents now can seek legal help from Legal Aid Bureau and Community Legal Clinics at North West and South East CDC. According to my knowledge, many of these people also face a host of complex personal and family problems. After addressing their legal needs, we should go the extra mile to help them solve other issues so they can move on with their lives.

It is heartening to see lawyers volunteer their time and expertise to help the community. This should be encouraged. The pro bono service will help strengthen our social fabric and create a better society. I wish to ask:

(1) Does the Ministry have any plans to encourage pro bono service from lawyers? It is said "Yangtze’s waves keep pushing forward", how will the Ministry ensure we have a continuous supply of pro bono lawyers?

(2) How do we help the pro bono lawyers who are busy professionals to use their time more efficiently and provide better services?

(3) How do we help the residents who do not know about the availability of such legal volunteer services? We should increase the publicity of such services by putting up notices at CCs, offices of unions, NGOs and grassroots organisations. This can help people who need the service to gain access.

*Cols. 4171-4172.

Pawnbroking industry

Dr Fatimah Lateef (Marine Parade): Sir, the pawnbroking industry started in 1875 mainly in the small businesses sectors giving out loans to walk-in pawners who presented valuables as collaterals.

Currently, there is an estimated 150 such businesses here. During periods of economic crisis and downturn as well as festive periods, there is often increased activity in this area. Recently, there have been several pawnbroking chain outlets set up nationwide. How are the licences for these outlets granted compared to the conventional pawnbroking shops we have? In line with the recent Bill passed on the regulation of moneylending industry, will the Ministry be considering some form of regulation in the pawnbroking industry, with a certain degree of flexibility, of course? Should we review and relook at the Registry of Pawnbrokers and their workings and guidelines?

The Minister for Law (Mr K Shanmugam): Sir, I thank the Members who have spoken. I will respond to Members' comments on the legal services sector and on international arbitration.

Mr Alvin Yeo asked about the effects of our liberalisation measures on the growth of our financial services sector and the impact on local law firms. As I have told the House, in December 2008, we awarded six QFLP (Qualifying Foreign Law Practice) Licences and augmented the Joint Law Venture (JLV) Scheme. The legal services industry has since grown. In 2008, the sector grew by 4.2%, while in 2009, the expansion was 4.3%. Considering that the economy as a whole grew only 1.4% in 2008 and actually receded by 2% in 2009, the legal services sector outperformed the rest of the economy.

With these new opportunities now available, our talent pool has been augmented. The total number of lawyers in Singapore has increased by some 450 between 2007 and 2009. That is about an 8% growth. Some Members may question whether that is a good thing. But, anyway, 2009, 233 students took Path A, compared to the usual 80 or 90 for DipSing previously. Almost three-quarters of them were Singaporeans, and included last year's top law student from Oxford, as well as New York and English law-qualified lawyers working in international law firms.

The six QFLPs commenced operations from the middle of last year. As a whole, they have expanded their offices here and employed 18% more lawyers from a year ago. Some have also started new practice areas, such as arbitration.

A new JLV has been formed between a Beijing-based Chinese firm (Dacheng), the largest firm in Asia, and a local law firm (Central Chambers). The total number of foreign law firms has also increased. Between 2007 and 2009, the number of foreign law firms grew by about 26% each year. We now have some 100 foreign law firms registered in Singapore.

There has also been renewed interest in Singapore as a legal services hub for the region. Several foreign law firms, with a number ranked in the global top 50 in terms of gross revenue, have also established offices in Singapore.

In time to come, together with the recovery of the financial services sector, the provision of cutting-edge legal services by law firms should help serve the financial services sector better.

Mr Yeo has raised some specific concerns about liberalisation. His primary point was that Singapore law firms (SLFs) face stiff competition because work may move to the foreign law firms as the market gets "invaded" by them.

As Mr Yeo acknowledged, he was a member of the Committee that came out with a clear recommendation to open up the market. At that time, I was a member of the profession, but not a member of the Committee. We know that the points made today by Mr Yeo were all made then, and the Committee must have carefully considered them. In a sense, there is a little reversal of roles here. I am responding on policies recommended by Mr Yeo's Committee to Mr Yeo who is now asking the questions which I assume were considered by the Committee. [ Laughter ]

In answer, I think it is relevant to quote paragraph 7.28 of the Report. I quote, "One major concern for opening up the Singapore legal market by allowing foreign lawyers and FLFs to practise Singapore law is the potential economic impact on SLFs and the legal market here. These include: (i) the supposed adverse impact on small practices which have a focused domestic practice akin to "general practitioners" in the medical industry; (ii) increased competition from FLFs in high-end transactional work; (iii) continued upward pressure on salaries; and (iv) the impact on court proceedings." These concerns were considered and given little weight in the report. The report concluded that the potential benefits well outweighed the concerns.

The central point I make is this: The issue now is not whether the opening up may affect some law firms. It conceivably may. The issue is whether it is beneficial first, for Singapore and, second, the legal profession as a whole. The answer on both counts is yes. Time does not permit me to elaborate – I have given elsewhere the reasons for saying that.

Mr Yeo also asks if TLCs (Temasek-linked companies) and leading corporates can give work to Singapore law firms. The response of the private sector is likely to be that they will give work based on merit and value, as Mr Yeo acknowledges. It is going to be tough competition.

Mr Yeo also spoke of the difficulties Singapore firms face in going overseas. The Committee at paragraph 7.38 came to the view that liberalising will help Singapore firms export their services and regionalise. At paragraph 7.51, the Committee stated: –

"While the concerns of large SLFs – those that are likely to face direct competition from FLFs practising Singapore law – are legitimate, the Committee believes that they will benefit over time from the enhanced competition, be incentivised to regionalise, and also benefit from increased demand in Singapore legal services."

The point, Sir, is that for lawyers as a whole, the options are much greater. But it will require that Singapore law firms, in particular the larger Singapore law firms, to prepare themselves for very intense competition, but that must benefit the market as a whole. The Committee certainly did not think that Singapore firms would be left only with litigation and conveyancing, which is one of Mr Yeo's concerns; and Mr Yeo and others in the Committee know that the examples of Hong Kong and Bangkok were specifically discussed. As to whether there should be reconsideration of aspects of the opening up, I think it is too soon to consider substantive changes to the policy,

which has only been implemented last year, or even to take a view as to whether the hope-for returns have or have not materialised.

I will now move to arbitration.

4.00 pm

Mr Alvin Yeo also asked about the growth of Singapore as a hub for international arbitration. Mr Christopher De Souza asked how the Government will promote Singapore as a seat for arbitration and Singapore law as the choice of law in arbitration clauses.

We are beginning to see clear results from measures taken. Singapore has further anchored its position as the arbitration hub for the region, and I use that phrase advisedly.

Over the decade, the Singapore International Arbitration Centre (SIAC) has grown from strength to strength. Just comparing 2008 to 2009, in 2008, SIAC handled 100 cases, and in 2009, it handled 160 cases – an impressive 60% jump.

More than 70% (or 114 out of 160) of its cases were international, rather than domestic, cases. This is both a reflection of SIAC's growing international standing and Singapore's appeal as a venue for international arbitration. These figures relate purely to arbitration cases and do not include cases involving domain name disputes and mediations. It also does not include cases where only SIAC's facilities were used for dispute resolution. So the increase in caseload is a reality, not a padded statistic as is sometimes the case with some other places.

SIAC has now positioned itself as a top international arbitral institution of choice. Last year, we saw the appointment of a blue-ribboned board comprising nine international leading arbitrators and arbitration counsels. These appointments bring a new depth of international expertise to SIAC and further boost its reputation as a premier international institution. I am told that the new Board is also updating the SIAC Rules. A draft will go out into consultation next week, and the target date for publication of the Rules is June.

Mr Yeo mentioned the SIAC conference in Mumbai. I understand from SIAC that many more such conferences are planned. As an aside to Mr Yeo's comments, I am certainly not promising to go to each of those conferences. In 2012, the SIAC will host in Singapore one of the most prestigious international arbitration conferences in the world – the International Council for Commercial Arbitration.

A 2008 report by the ICC International Court of Arbitration ranked Singapore the top city in Asia for ICC arbitrations and one of the five most popular venues alongside Paris, London, Geneva and Zurich.

To complete the "arbitration ecosystem", the Government established Maxwell Chambers, a dedicated state-of-the-art physical arbitration facility. Last July, Maxwell Chambers started operations. By the time it was officially opened in January this year, it had already hosted more than 60 hearings. More than half of Maxwell Chambers' hearings involved foreign parties and are truly international arbitration cases.

Our efforts have planted Singapore firmly on the world map for international arbitration. The Australians are looking to set up an international arbitration centre in Sydney, much like Maxwell Chambers. The Vice-President of an Australian arbitral institution has been quoted in an international journal as saying that, "with Maxwell Chambers and the promotion by its government, Singapore will always be the premiere choice because it is a hub between the East and the West."

To further consolidate our position as a regional legal services hub and international arbitration centre, the Government has announced a new tax incentive which will confer a 10% concessionary tax rate for five years on incremental income derived from international legal services that are GST zero-rated. Generally, this will include all legal services connected to land and goods outside Singapore, and intangible legal services provided to overseas clients.

Mr Yeo has suggested that the tax incentive for arbitration be applied to all profits instead of only to incremental profits. This may not specifically encourage law firms to undertake more arbitration work. It will mean that law firms can continue to do the same amount of work and still enjoy the tax incentive, which runs counter to the objective of the tax incentive to encourage more arbitration activities, and it will lead to erosion of the tax base. Hence, only the incremental profits will enjoy the tax incentive.

Mr Yeo also suggested giving double tax deductions for the expenses of overseas branches of law firms. There are schemes already in place. IE Singapore, for example, administers a Double Tax Deduction for Marketing Development Scheme. We are happy to look at how we can support the internationalisation effort of the local law firms together with the relevant agencies and law firms which are interested.

Although Singapore's domestic market is small, with the growth of Asia, there is great potential to tap regional opportunities that can be tapped from Singapore. The new tax incentive will push law practices in Singapore to handle more such work. This will further strengthen Singapore's role as a Global-Asian hub and a nexus for high value-added activities.

Mr de Souza asked about promoting Singapore law as the law of choice. There is growing support for the use of Singapore law. In 2008, we amended the Legal Profession Act to also allow foreign law practices to participate in Singapore law work through Singapore qualified lawyers wherever arbitration is contemplated. This may also encourage them to use Singapore law as the governing law for arbitration. We have also given parties to an arbitration the flexibility to use any law and employ any arbitrator or arbitration counsel for hearings in Singapore.

Our main objective is to position Singapore as an international arbitration centre. In many cross-border transactions, English or New York law may be used for a variety of commercial reasons. The market will decide these matters, but we want to anchor the arbitration in Singapore as far as possible.

Next, I will respond to Mr Zainudin Nordin, who asked for an update on the Government's land acquisition policy and whether the philosophy towards acquisition has evolved over time.

The Government acquires land for various public purposes, such as for the building of schools, hospitals, MRT, public housing and industrial parks. This has allowed us to build up our infrastructure rapidly and develop Singapore to what it is today.

The Economic Strategies Committee has highlighted that as Singapore grows, there will be a greater demand on our land resources. We will have to intensify the current land use to make better use of our limited land-stock. We foresee that the power to acquire will continue to be necessary for Singapore's growth and development.

We are, however, extremely mindful of the impact of any compulsory acquisition on property owners. Wherever possible, the developing agencies will try to minimise the disturbance to existing developments. They will do this through the use of planning and design methodology as well as innovative construction technology. However, in a densely built-up environment like Singapore, it is not possible to completely avoid affecting existing developments.

Where acquisition cannot be avoided, each proposal for acquisition is carefully considered and undergoes a stringent evaluation process by the relevant Government agencies. Every Government agency that initiates an acquisition must provide full justification. They have to ensure that approval has been obtained for the intended use of the acquired land. They have to demonstrate that the proposed acquisition is unavoidable and the amount of land to be taken is at the minimum. For major acquisitions, they have to present their proposals to a Ministerial Committee comprising the Ministers for Law, National Development and the Minister-in-charge of the Government agency that has initiated the acquisition, eg, the Minister for Transport if the acquisition relates to MRT or a major expressway development. Finally, every proposal for land acquisition must be submitted to Cabinet for approval.

Mr Nordin suggested that projects had been delayed in the past due to land acquisition issues relating to land area compensation and apportionment of compensation. It is not clear which specific project Mr Nordin is referring to. That should usually not happen. The usual practice is that agencies would have sufficient lead time to plan for a major infrastructure project, and would have factored into the planning process the time needed to sought out issues like land area to be acquired. Issues like compensation are provided for under the Land Acquisition Act, and the basis for compensation is clearly set out. If owners disagree with the compensation, they can take it up with the Land Acquisition Appeals Board, and this is done after the acquisition. So there should be no question of any project being held up because of acquisition issues.

In 2007, we amended the Land Acquisition Act to provide for compensation based on the prevailing market value, for acquired properties. Affected owners will be paid fair compensations.

Sir, Prof. Ho will respond to the other questions.

The Senior Minister of State for Law (Assoc. Prof. Ho Peng Kee): Sir, I will now deal with the four "Cs" – though they are not cash, credit card, car and condominium, but CMC, CLC, CPC and CBS, all of which I have been overseeing, although for the CPC only during the initial period, and I will end with a "P", not "pau", but pawnbroking.

Sir, as society develops, we should guard against becoming overly-litigious. MinLaw therefore actively promotes community mediation as a means of settling relational disputes. We have set up three Community Mediation Centres (CMCs) across Singapore, supported by a panel of 139 trained committed volunteer mediators which, last year, conducted about 750 mediations, achieving a settlement rate of over 70%.

Sir, the CMCs will work closely with key agencies, like the CDCs, Town Councils, Police, HDB branch offices and grassroots organisations, to get them to channel cases early to the CMC. We are also amending the Criminal Procedure Code (CPC) to strengthen the referral process and encourage the use of mediation to resolve community and social disputes.

Sir, as mediation is a useful life-skill, MinLaw runs an extensive outreach that has introduced mediation concepts to 80,000 primary and secondary students and equipped them with conflict resolution skills. We recently also started a "Mediator Aide" programme to expose university and polytechnic students to CMC's work. These two programmes have long-term benefits.

Sir, notwithstanding alternative means of settling disputes, some will still end up in court. We should therefore ensure that lower-income Singaporeans have access to affordable legal advice and services, if needed. This is where volunteer lawyers can make a difference.

To the credit of the Bar, the rate of volunteerism amongst lawyers has grown. I hope the work of these volunteer lawyers will receive good publicity. On our part, we will do more to reach out to residents on the ground, a point that Mr Ong has raised. Last year, more than 400 lawyers from 33 law firms volunteered at the Community Legal Clinics, a joint initiative of the Law Society, MinLaw, Singapore Academy of Law (SAL) and the North West and South East CDCs. The Legal Aid Bureau (LAB) has about 200 active volunteer lawyers and, last year, they were assigned more than 1,800 cases, about a third of the Bureau's caseload. Many lawyers also volunteer under schemes like Project Law Help, which provides free commercial advice to non-profit organisations and help out in pro bono initiatives at the Supreme Court and Subordinate Courts.

Sir, MinLaw will continue to collaborate with the Law Society's Pro Bono Services Office to strengthen our lawyers' spirit of volunteerism, especially in the younger ones – a point that Mr Ong also makes – by creating opportunities for them to work on actual cases. LAB is working with NUS to set up an elective Clinical Legal Education programme, where third and fourth-year law students will be trained to assist clinical professors in legal aid cases – I think primarily family law type cases. LAB is also participating in an SAL programme involving junior college students aspiring to study law. In addition, LAB and the Pro Bono Services Office are working with NUS and SMU to foster student interest in pro bono legal work. So with successive batches of graduating students, we will lay strong foundations to foster volunteerism in lawyers.

Now, as some lawyers, wishing to volunteer, may not know how to do so, the Pro Bono Services Office recently published a "Guide to Legal Pro Bono Opportunities" on its website. Lawyers can now choose something in line with their interests and available time.

To better understand volunteers' motivation, the Pro Bono Services Office will survey practising lawyers to gather data on their involvement in pro bono work. LAB has also gathered data from a survey of its assigned solicitors. The input collected from these surveys will be used to tailor messages and programmes to tap the volunteers' passion more effectively.

As support from employers is a key factor, the Pro Bono Services Office is raising awareness amongst law firms of the value of fostering a pro bono -centred Corporate Social Responsibility culture, through seminars and articles in the Singapore Law Gazette . Volunteer lawyers enable our law firms to connect better with Singaporeans on the ground, giving them a human face. Sir, some firms have responded positively; eg, their senior lawyers hold round-table discussions with the younger ones on pro bono matters, guiding them on how best to dispense legal advice. I hope more firms and lawyers will take on pro bono work.

Let us move on to Mr de Souza who asked when the CPC would be amended, basically seeking for an update.

After the public consultation on the draft Bill closed in February last year, MinLaw organised a series of intensive Working Group meetings with representatives from relevant Government agencies, the Law Society, the Association of Criminal Lawyers, NUS, SMU as well as a number of senior lawyers in practice. These useful sessions enabled the Working Group to study feedback received and discuss the feasibility of proposals mooted. As a result, I believe that the Bill is now a better one.

Meanwhile, the Inter-Ministry Committee on Community-Based Sentences (CBSes), which I chair, has been coordinating amongst the relevant Ministries on how best to implement the new CBSes, which should assure Dr Maliki that we have been looking at how to implement them effectively.

4.15 pm

The review of the CPC is now complete. MinLaw will introduce the Bill in Parliament in the second quarter of this year and, at that time, we can have a full debate.

Sir, on Community-Based Sentences (CBSes), which will be introduced under the CPC, will give the courts greater flexibility to mete out appropriate sentences to punish, deter and rehabilitate offenders of less serious offences. I think Dr Maliki has listed these. The new ones are the Mandatory Treatment Order (MTO), the Day Reporting Order (DRO) and the Short Detention Order (SDO), whilst we are enhancing the Community Service Order (CSO) and the Community Works Orders (COMWO).

Dr Maliki is correct that resources have to be geared up. We are mindful of that. Nevertheless, we do not start from scratch as the concept of the CBS is not new. Therefore, we already have a platform to build on. So the new enhanced sentencing options, meaningful though they are, are part of a continuous fine-tuning of our penal system. I think Members will know of existing community-based rehabilitative and sentencing options which have been well-received by Singaporeans, such as the residential and half-way house schemes for drug addicts and the home detention scheme that has been introduced and enhanced. And, of course, the long-standing probation scheme, first for juveniles, and then extended also to adults. So we will build on these experiences and expertise.

Another point is that these sentences target low-risk offenders whom the Courts assess to be able to serve their punishment in the community under proper supervision. Hence, I do not expect community resources to be unduly strained. Indeed, this enhancing of CBSes is a good opportunity for more volunteers and community groups to chip in. Some have done so; I hope more will do so. In fact, this COS response gives me the opportunity to get more volunteers to come onboard, whether it is pro bono work, whether it is helping young lawyers, whether it is helping out with CBSes.

On MTOs which IMH will spearhead, there is currently already a channel for professionals to help offenders with psychiatric disorders. In the year 2007, the Community Court formed a Resource Panel comprising volunteer agencies to help derive viable solutions and aftercare plans for offenders. In this way, therapeutic, psychiatric, and rehabilitation assistance has been provided to more than one third of the cases dealt with by the Community Court that year, which included offenders with psychiatric disorders.

Sir, on implementation and review, lead agencies have been appointed to implement the CBSes. MHA will implement the Day Reporting Order and the Short Detention Order; MCYS, the Community Service Order; and MOH, the Mandatory Treatment Order. Now, I can slow down, because I am okay for time. These lead agencies will monitor and evaluate the effectiveness of these CBSes under their purview. The Inter-Ministry Committee, which I have been chairing, will retain oversight and will review our overall CBS framework holistically at an appropriate time; so there will be still continual monitoring. It is work in progress.

Sir, finally, let me assure Dr Fatimah Lateef that we take a balanced approach to regulating pawnbrokers. To protect the interests of the public, we apply stringent criteria to all applicants for a pawnbroking licence and require high standards from all registered pawnbrokers, regardless of whether they run a single or a chain of pawnshops, a point that Dr Lateef makes.

At the same time, as pawnshops are commercial entities, we give them sufficient flexibility, a point Dr Lateef makes, to determine how they can attract customers and stay viable. Some pawnshops are run in the "traditional" way, as family-run businesses, to serve a niche neighbourhood market where customers prefer a more personal service. Some have introduced service innovations to better serve their customers. And yet others are larger pawnshops that have introduced new marketing programmes to attract new customers.

We encourage healthy competition amongst pawnshops as it helps to improve customer service and give customers the best terms in pawn transactions. And, indeed, actually having more access to pawnshops is also one strategy in combating unlawful moneylending.

Sir, just like what we did for the Moneylenders Act, we are reviewing the Pawnbrokers Act to strengthen its provisions, to ensure that it remains relevant and that it meets the requirements of the evolving business environment.

The Chairman: Mr Yeo, we have time for a clarification.

Mr Alvin Yeo: Two clarifications, Mr Chairman. I certainly was not seeking to reopen the debate on liberalisation. That debate has been done and, as I mentioned, I was on the side that was for it. My request of the Minister is for, if you like, an update on the progress we have made thus far: specifically, have we gotten feedback from the banks and financial institutions which are key players in the financial sector which we are trying to support? It is an enhancement of the level of service.

My second request for clarification relates to my call for leading local corporates to sort of allow Singapore firms a chance to pitch for their work – not to force them to use us, but to give us a chance to compete, and this becomes more relevant as Singapore companies venture overseas. Because if we cannot persuade Singapore companies to at least allow them a chance to tender for the work, it becomes even more difficult to persuade non-Singaporean companies. And this is not unknown. US and Japanese companies, just to name two, often bring their lawyers with them. And perhaps I could invite the Minister to comment on that.

Mr Shanmugam: Sir, I thank Mr Yeo for the two clarifications. On his first point as to whether there is specific feedback from financial institutions and others on the liberalisation and the new entrants, it is early days. Most of them started their practices only in the middle of last year. And as Mr Yeo and Members know, last year was probably not a banner year for financial institutions. But having said that, the feedback from the general industry has been positive. It has been positive amongst young lawyers, for obvious reasons, which Mr Yeo appreciates. I am sure his firm, like many other firms, are under pressure because young lawyers are being poached by the international law firms with remunerations which are somewhat higher. The feedback from clients and financial institutions has also been generally positive. So I think if we were to take a snapshot at this point in time and ask, has it worked out in the way that we envisaged? I think the answer must be, it certainly looks like getting there, though it is early days. And I would suspend judgment on this for some time, because when we implement a policy like this, which by its very nature has a very long-term perspective, we need to take our time to assess it.

As to the second point about encouraging our Government-linked companies (GLCs), Temasek-linked companies (TLCs), and so on, to use Singapore law firms, I think we have many CEOs and senior people within this Chamber itself – we know how the market works. It is not even specifically law firms. They look for specifically the kind of lawyer who can assist them in the specific matter. It is not much that the Government can do to even suggest to the corporates and private institutions that they should allow everyone to tender. But I think it is in the interest of the corporates, the GLCs, TLCs and others – the very nature of the process, it makes sense for them to open the process up, as much as possible, to all who can add value and then choose the best.

Mr Alvin Yeo: Mr Chairman, I would like to thank the Minister and the Senior Minister of State for their clear, concise, yet comprehensive – only three "Cs" – replies and, to that end, Mr Chairman, may I seek leave to withdraw the amendment?

Amendment, by leave, withdrawn.

The sum of $164,172,000 for Head R ordered to stand part of the Main Estimates.

The sum of $154,602,000 for Head R ordered to stand part of the Development Estimates.