LOAN TO SINGAPORE TELEPHONE BOARD

3.30 p.m.

The Financial Secretary (Mr T. M. Hart): Sir, I have His Excellency the Governor's authority to move,

That this Assembly approves of the loan by the Government to the Singapore Telephone Board of a sum not exceeding $15 millions at an interest rate of 5� per cent per annum repayable over a period of twenty years by half yearly installments based on the annuity method to be secured by a legal mortgage of the properties and assets belonging to and to which the Board holds legal title for the purpose of capital expenditure on the Board's expansion programme.

Sir, as hon. Members are aware, the Telephone Board was set up in 1955 to operate the telephone undertaking which Government had acquired from the Oriental Telephone and Electrical Company Limited. The Board is charged with the task of providing an efficient telephone service for the public of Singapore. It is given wide powers under this Ordinance to carry out this task. Since it was established, the Board has set itself to push on with the forward policy of expansion. Following up plans prepared by the Oriental Telephone and Electrical Company, the Singapore telephone system was doubled in its capacity between 1950 and 1955. In the succeeding five years up to 1960, it is planned to double the capacity once more and, at the same time, looking ahead to future requirements to provide a basis for even larger extensions in the years to come. In order to implement this policy, a five-year programme has been drawn up covering work to be undertaken up to 1960. In accordance with this programme, it is planned that in 1957 the North Exchange in Thomson Road, the Queenstown Exchange, and the Bukit Panjang Exchange will be completed. In 1958 work will be finished on the City Exchange and on the extensions to the Central Exchange and the Paya Lebar Exchange. By 1959 it is hoped that exchanges will be completed at Tanjong Katong and possibly Nee Soon and Jurong. This is a very large and expensive programme and it has been calculated that, in order to finance it, the Telephone Board will require between now and the end of 1959 $15 million over and above any revenue surplus that may be available from year to year. Of this $15 million, $5 million will be required late in 1956 or early in 1957, and the balance over the next two years as the progress of work demands. In this connection, Sir, the Singapore Telephone Board has requested that it should be allowed to draw the money as and when it is actually required, so that interest will not fall due to be paid in advance of the actual need for expenditure. This is the practice followed at the present time in respect of loans to the Singapore Improvement Trust and is, of course, acceptable to Government.

The Board's investment in new buildings and equipment will show early financial returns. There is a steady demand for new telephone facilities, and there is no doubt that the increased number of subscribers, as each new exchange comes into action, will mean a steady rise in the Board's disposable income. As far as can be foreseen, the Telephone Board should have no difficulty in meeting the annual installments of the loan by 1959.

As regards the question of financing the Board, it has been decided that funds for development should be provided by Government, and that the Board should not, for the present at any rate, make any independent effort to raise funds from the public. Financial requirements for the Board have been taken into account in Government's plans for capital development over the next five years, which I mentioned when introducing the 1957 Appropriation Bill.

As regards the terms of the loan, it is considered that interest at the rate of 5� per cent will be fair and reasonable in the present circumstances. The loan will be repaid over a period of 20 years by annual installments calculated on the annuity basis. This is the method of repayment adopted in the case of a recent loan to the Singapore Improvement Trust. Sir, I beg to move.

Mr Goode: Sir, I second it.

Question put, and agreed to.

Resolved,

That this Assembly approves of the loan by the Government to the Singapore Telephone Board of a sum not exceeding $15 millions at an interest rate of 5� per cent per annum repayable over a period of twenty years by half yearly installments based on the annuity method to be secured by a legal mortgage of the properties and assets belonging to and to which the Board holds legal title for the purpose of capital expenditure on the Board's expansion programme.