HARD CURRENCY EARNED BY SINGAPORE AND FEDERATION OF MALAYA

Mr R. Jumabhoy asked the Financial Secretary if he will state the combined or respective hard currency earnings of Singapore and the Federation of Malaya for the years 1952, 1953 and 1954, what amount was allowed to be spent by Singapore importers, whether the Colony derives any direct benefit by handing its hard currency earnings to the United Kingdom, and whether such earnings are credited at the current market rate so that Singapore and the Federation can benefit thereby. (Question No. 2, Official Report, 26th April, 1955; Volume 1, No. 2, column 1).

Mr T. M. Hart: pursuant to his reply [Official Report, 26th April, 1955; Volume 1, No. 2, column 1] supplied the following information:

Official records indicate that the value of exports to hard currency countries (American Account Countries and Canada) from Malaya, including re-exports, for the years 1952, 1953 and 1954 were as under: - 1952 M$792.1 million 1953 M$590.0 " 1954 M$585.4 " There are also certain receipts from tourists, for services rendered, and in respect of personal remittances made to Malaya, but detailed information is not available.

Direct imports into the Federation and Singapore from hard currency areas for the years 1952, 1953 and 1954 were as under: - 1952 M$172.7 million 1953 M$ 87.5 " 1954 M$ 92.7 "

Large remittances are made to American and Canadian Accounts in London for invisible imports. Film royalties payable to American companies represent a considerable item under this heading. These payments are of course the equivalent of hard currency expenditure. Arrangements have also been in force for a number of years to reimburse Indonesia in dollars for the re-export to the U.S.A. of rubber imported from Indonesia. Substantial annual payments are made under this heading. Finally, in order to obtain a complete picture of Malaya's dollar expenditure it would be necessary to take into account the hard currency content of manufactured goods imported by Malaya from other members of the Sterling Area. A typical example is tobacco. Figures for these are not available but it is certain that the gap between hard currency earned and hard currency spent by Malaya is much narrower than the figures for visible exports and imports suggest.

There is no fixed allowance for such imports. The policy in the Federation and Singapore, as in other countries of the Sterling Area, is to permit imports from hard currency sources of any commodity regarded as essential for local economies. In the years in question, a wide range of manufactured products and materials for local industries and of general consumer goods have been purchased. Arrangements exist to enable specific items to be considered on the basis of individual applications.

The Sterling Area dollar pool is a central reserve maintained by the United Kingdom into which member countries credit their dollar earnings and from which they are provided with dollars on the basis of the particular needs of each territory. This procedure ensures that the essential hard currency needs of Singapore and the Federation are met, and that full use is made of the hard currency earned by the Sterling area as a whole. Pooling of gold and dollar reserves strengthens sterling, enhances its international status and brings nearer the prospect of full sterling convertibility. These factors are all of vital interest to an international trading centre such as Singapore.

Canadian and U.S. dollar earnings which accrue to Malaya from the activities of individual traders are sold to banks in Singapore and the Federation at the official rate ruling at the time of sale. These rates are in fact the current market rates.