NGEE ANN KONGSI (INCORPORATION) (AMENDMENT) BILL

NGEE ANN KONGSI (INCORPORATION) (AMENDMENT) BILL: Order for Second Reading read.

4.55 pm

The Minister of State for Education (Mr Gan Kim Yong): Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

In the history of our nation-building, a few pioneering individuals and corporations have been strong and consistent supporters of education. Ngee Ann Kongsi is one such pioneer that has made significant contributions to our education system. The Kongsi established the Ngee Ann College in 1963. Some four decades later, with the funding and support of both the Government and Ngee Ann Kongsi, the college has grown to become the Ngee Ann Polytechnic, an institution of higher education that is well respected by employers and reputed internationally.

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Ngee Ann Kongsi has not only contributed money to help fund student programmes, but also provided much of the land for the polytechnic's campus. Generations of students have benefited from the Kongsi’s unwavering support for education.

The Ngee Ann Kongsi was incorporated by the Ngee Ann Kongsi (Incorporation) Ordinance of 1933 to administer its income and properties for various worthy causes, including the support for education. The Ordinance originally required the Kongsi to donate 50% of its income or $100,000 annually, whichever is higher, to Ngee Ann College in perpetuity.

Later in 1972, Ngee Ann Kongsi proposed to develop its property along Orchard Road. The Government felt that the gains from the appreciation of property value were a result of the overall development of the Orchard Road area and therefore a larger portion of such gains should benefit the society at large. The Ordinance was then amended to increase the Kongsi's contribution to Ngee Ann Polytechnic to 75% of its income, in return for land development rights for its property along Orchard Road.

Need for amendment

There have been significant changes over the years. For example, Ngee Ann Kongsi's annual income has grown substantially from $0.5 million in 1972 to $23 million in 2006 mainly due to dividend income earned through its interests in the Ngee Ann City development. Ngee Ann Kongsi's contribution over the years has allowed Ngee Ann Polytechnic's Endowment Fund to be accumulated to $119.3 million as at end of FY2006. It is therefore both appropriate and timely to amend the Ordinance with a view to giving the Kongsi more flexibility in its contributions so that a wider spectrum of society can benefit from them.

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Let me now highlight the key clauses of the Ngee Ann Kongsi (Incorporation) (Amendment) Bill.

Key clauses of Bill

Scope of contribution of income by Ngee Ann Kongsi

Mdm Deputy Speaker, we want to preserve the original intent of Parliament when it last amended the Ordinance in 1972 that 75% of Ngee Ann Kongsi's income should benefit the society at large. However, we should give the Kongsi more flexibility to decide on the beneficiaries of its donations. Clause 10 of the Bill will amend the Ordinance to allow the Kongsi to contribute 25% of its income to Ngee Ann Polytechnic, 40% to other educational institutions and 10% to other charitable causes, maintaining a total of 75%. Giving the Kongsi greater flexibility in its income contributions will benefit more types of educational institutions and charitable causes.

Over the years, the scale of the Kongsi's operation has also increased. There is therefore a need to review the way Ngee Ann Kongsi's income is computed. The Kongsi will incur operating expenses and depreciation cost in deriving the income. Such expenses should be deducted in the computation of income, in line with common accounting principles. Clause 10 therefore also clarifies the definition of the term "income" to mean net income, ie, the income after deducting operating expenses and depreciation cost.

Treatment of proceeds from sale or disposal of Ngee Ann Kongsi's assets

Next, the present Ordinance requires Ngee Ann Kongsi to donate 75% of all moneys arising from the disposition of any of its property and not just from recurring income. This will dilute the Kongsi's asset

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base over time and reduce the capacity to generate income for future donations. It is in the long-term interest of potential beneficiaries that we encourage the Kongsi to grow and enhance its asset base, so that it can contribute more to society in the long run.

Clause 10 will amend the Act to allow Ngee Ann Kongsi to re-invest the proceeds from the sale or disposal of its assets by excluding them from the definition of net income. This way, the Kongsi will be able to turn over its assets for better returns.

Management of Ngee Ann Kongsi's subsidiaries

Next, the Ordinance does not specifically address the governance of subsidiary companies set up by the Kongsi. As a case in point, in 1989, Ngee Ann Kongsi transferred its leasehold interests in the piece of land at Ngee Ann City to Ngee Ann Development Pte Ltd (NAD) in exchange for 70% equity stake in NAD. As NAD is a separate independent legal entity from the Kongsi, it does not come under the direct purview of the Ordinance. It may undertake transactions detrimental to the interest of the Kongsi and its beneficiaries. For example, it is possible for NAD to disburse funds to organisations other than those provided for in the Ordinance.

We need to protect the interests of the educational institution beneficiaries under the Ordinance. The new section 20B, as provided for in clause 10, is designed to do that. We will now require Ngee Ann Kongsi and its appointed directors to exercise their voting rights in the Kongsi's subsidiaries in the interests of these beneficiaries. If this requirement is contravened in the passing of any resolution, then that resolution and any consequential action will be invalid and of no effect.

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Composition and procedural issues of the Ngee Ann Kongsi Committee of Management

Finally, the remainder of the Bill amends some composition and procedural issues of the Ngee Ann Kongsi Committee of Management which oversees the Kongsi's operations. These amendments are primarily administrative and procedural in nature and do not have policy implications.

Conclusion

Mdm Deputy Speaker, Ngee Ann Kongsi has always demonstrated its unstinting commitment to Ngee Ann Polytechnic and for education in general. We need more of these organisations to step forward to work hand-in-hand with the Government to provide our students with a world-class education. I am confident that the amendment of the Ngee Ann Kongsi (Incorporation) Ordinance introduced under this Bill will allow Ngee Ann Kongsi more flexibility to promote the advancement of education in Singapore and bring about even greater benefits to the larger society.

Madam, I beg to move.

Question proposed.

5.05 pm

Dr Lily Neo (Jalan Besar): Mdm Deputy Speaker, I rise to speak in support of the motion to amend the Ngee Ann Kongsi Ordinance. The Bill, steeped in history and moved in 1932 by Teochew migrant merchants who had made their fortunes here, had benefited the students of Ngee Ann Polytechnic for many years. The students have benefited from the handsome donation of 75% from the incomes of Ngee Ann Kongsi that was set up by the Teochew merchants to manage their affairs on a "proper footing".

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It is through the vision and public-spirit mindedness of the early Teochew merchants that Ngee Ann Kongsi's fortunes are where they are today. We should also recognise that the fortunes of Ngee Ann Kongsi would not have been possible without the progress and development of Singapore and certainly even less possible without the support of the Singapore Government. For instance, Ngee Ann City, from which the Ngee Ann Kongsi derives much of its income, was originally bought as a burial ground for the Teochew community. The Teochew merchants then had the foresight to ride the growth and progress of Singapore and apply to the Government for a change of use. The Government approved the application and that resulted in the Ngee Ann City of today. Ngee Ann City is a major source of income for Ngee Ann Kongsi which has provided and would continue to provide much financial assistance towards the society. Mdm Deputy Speaker, it is timely for this House to put on record now our appreciation of the astute foresight of our generous early Teochew merchants, without which all these would not have been possible.

Mr Tan Cheng Lock, speaking in support of this Bill then, had hoped that other communities in Singapore would take similar steps. I am sure that many of the communal clans, associations and societies have benefited from the recent boom in property prices. Many of these clan associations' financial positions have ridden on the tailwind of progress that the buoyant Singapore economy has provided. I am told that many of these communal clans and associations have contributed to the Singapore society in their own ways with their very much improved financial positions. Although other communal clan associations, unlike the Teochews, who are doing their bit through an Act of Parliament, I am hopeful that they would continue to contribute more to education issues as well as to other charitable causes.

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Madam, Ngee Ann Polytechnic has come a long way from its inception as Ngee Ann College in 1963, to Ngee Ann Technical College in 1972, and then to the present-day Ngee Ann Polytechnic. This institute of education has been transformed in more ways than just its name. Ngee Ann Polytechnic has moved from its early days of providing education opportunities to the children of the Teochew community. The student intake of Ngee Ann Polytechnic is now not only representative of the Singapore society but has taken on a cosmopolitan outlook. It now boasts of having international students within its fold. Also, the courses Ngee Ann Polytechnic currently provides have undergone substantial changes. It has now moved from just providing a handful of basic courses to incorporating cutting-edge science and technology courses.

In the earlier days, there were only two polytechnics: Ngee Ann Polytechnic and Singapore Polytechnic. Today, we have five polytechnics. And with polytechnic education as the preferred choice of post-secondary school students, it is timely the donations from Ngee Ann Kongsi go to benefit a broader student community. Hence, I support the move of 40% to other educational intents and purposes at the approval of the Education Minister.

Education today is very much different from those days when Ngee Ann Kongsi decided to donate 75% of their incomes. Madam, the kind of support that the polytechnics need has evolved. The latest is for a majority of polytechnic students to be sent for overseas training; hence, the students would need more support. I am confident that the Teochew community, in general, and the Ngee Ann Kongsi management, in particular, would embrace this move towards helping students in a broader aspect with the donations.

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Finally, I also support the move to apportion 10% of the incomes of Ngee Ann Kongsi to benefit other charitable organisations. I firmly believe and am confident that Ngee Ann Kongsi would agree with me on these moves.

5.11 pm

Mr Seng Han Thong (Yio Chu Kang): Mdm Deputy Speaker, as a member of the board of directors of Ngee Ann Kongsi and a member of Ngee Ann Polytechnic Council and Ngee Ann Polytechnic administration committee, may I declare my interest, and I must say I am in a good position to see why there is now a need to free Ngee Ann Kongsi so as to benefit other educational institutions and charitable causes.

I welcome the Ngee Ann Kongsi (Incorporation) (Amendment) Bill, which allows the Ngee Ann Kongsi to channel its profits to other education and charitable causes other than just Ngee Ann Polytechnic.

The Bill will give Ngee Ann Kongsi more flexibility to decide on the beneficiaries of its donations. However, of the 40% of its net income to other educational institutions, may I know whether it will be decided by MOE or Ngee Ann, and what are the criteria? And if it is decided by MOE, may I suggest that due credit be given to Ngee Ann? As the Chinese saying goes: yin shui si yuan - when one drinks water, one thinks of its source; in short, be grateful.

But one may ask: what is Ngee Ann? And what is the meaning of "Ngee Ann"? Today, Ngee Ann Polytechnic is a brand name. But to many older Teochews, Ngee Ann Kongsi is also a brand name. Thus, when I was invited to be the guest-of-honour at the Ngee Ann Polytechnic National Day celebration, I shared my observation with the students and the

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staff that many of them, in fact, do not know the link between Ngee Ann Kongsi and Ngee Ann Polytechnic. And some even queried: how come Ngee Ann City can use our name "Ngee Ann?" They were also asking: are there any links between Ngee Ann Primary School, Ngee Ann Secondary School and Ngee Ann Polytechnic?

Yes, in fact, these are all linked to Ngee Ann Kongsi - it is Ah Kong . "Ngee Ann" is the ancient name of Teochew. In fact, in ancient times, Teochew was not called Teochew; Teochew was called "Ngee Ann". It is called "Teochew" only a few hundred years ago. "Kongsi" - what is the meaning of "Kongsi"? "Kongsi" means care and share. So, Ngee Ann Kongsi means the "Teochew care and share". Later on, the Kongsi owned a large piece of land, as mentioned by the Minister of State, and that part of the land really gave Ngee Ann Kongsi the income to give more care and more share to the Teochews in the earlier years, and, later on, it was extended to all Singaporeans.

Mdm Deputy Speaker, Ngee Ann Kongsi is a foundation which has been very actively involved in education, cultural and welfare activities since the 19th century. Over the last 40 years, Ngee Ann Kongsi has donated a total of more than $100 million to Ngee Ann Polytechnic alone. Of course, it has also donated to many other organisations. This is the kind of Ngee Ann spirit.

May I now speak in Mandarin.

( In Mandarin ) [For vernacular speech, please refer to Appendix A.] The Ngee Ann spirit inspires the Teochew to endure the hardship and move ahead in difficult times. And it teaches many of us to share with our fellow citizens.

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The Ngee Ann Kongsi and the Ngee Ann spirit have become part of our Singapore spirit that enables us to overcome crisis, one after another.

And, indeed, Ngee Ann Kongsi has, through Ngee Ann Polytechnic, contributed to our society greatly and the beneficiaries are from all walks of life. Sim Wong Hoo, founder of Creative Technology, is one exemplary graduate of our Ngee Ann Polytechnic. Sim Wong Hoo rose from a humble background in the difficult period during the 1960s to create an international brand name that is well known for innovation and quality. This is the kind of Ngee Ann spirit.

This amendment is, in fact, a timely reminder of the Ngee Ann Kongsi's contribution over the last four decades. It is only right that after contributing so much to the society, the amendment now gives the Ngee Ann Kongsi greater freedom, more resources, and greater say in identifying other worthwhile charitable causes.

Business leader Li Ka Shing, who is also a Teochew, donated $19.5 million to Singapore Management University in 2002 and, this year, he donated another $100 million to the Lee Kuan Yew School of Public Policy. This is the kind of Kongsi spirit, the sharing spirit.

Ngee Ann Kongsi can do the same in a big way and benefit not only the Teochews but the whole population.

( In English ): I support the amendment Bill.

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*Cols. 1289-1290.

Mr Gan Kim Yong: Mdm Deputy Speaker, first, I would like to thank Dr Lily Neo and Mr Seng Han Thong for their strong support for the amendment Bill, particularly to Dr Lily Neo for supporting the allocation of 40% of the income to other educational institutions. And I also

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like to thank her for the tribute and recognition she gave to the pioneers of Ngee Ann Kongsi who founded the corporation and benefited the society. I also want to address Mr Seng Han Thong's query on who decides on the 40%.

Let me assure Mr Seng that it will be a consultation process. Ngee Ann Kongsi will indicate their interest of which educational institutions they would like to support and the approval will be given by the Minister eventually. So, it is a process of consultation and understanding, and we will take into account the Kongsi's desires, their traditions and linkages.

At the same time, I would also like to stress that credit will definitely by given to Ngee Ann Kongsi for their contributions. Not only do we have to yin shui si yuan , but we must also zhi en tu bao. I think these are values that are entrenched in our Asian society and we want to continue to promote them.

Mdm Deputy Speaker, I believe with these amendments, we will give Ngee Ann Kongsi greater flexibility so that they can respond to the changing needs of its

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beneficiaries. The Ministry of Education will continue to work with the Kongsi to realise the vision of its founders to contribute to the society at large and to allow it to serve as an example and an inspiration for many others to follow suit.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Mr Gan Kim Yong].

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