PEOPLE'S INVESTMENT CORPORATION BILL

Order for Second Reading read.

3.21 p.m.

The Minister for Commerce and Industry (Mr J. M. Jumabhoy): Mr Speaker, Sir, I have His Excellency the Governor's consent to proceed with this Bill and I move, "That the Bill be now read a Second time."

The purpose of the Bill, Sir, cannot be put in more excellent words than in the statement I made to this House on 10th September, 1958. I shall read out those portions in the statement which relate to the introduction of this Bill. It is from Hansard of 10th September, 1958, columns 689 and 690:

"Government realises that the working man and woman in Singapore has up to now had very little opportunity or incentive to actively participate in the ownership of industries and to benefit therefrom. Government therefore feels that it is not only necessary but also the duty of an elected Socialist Government to actively assist the people in owning and opening some industries which are profitable because they produce goods needed by the vast majority of the population. Such ownership should not be by the State with public funds but rather directly by the people on an individual basis so that every individual shareholder benefits directly from the profits."

It goes on:

"In order to organize the working man and woman for the new role of industrial ownership, a People's Investment Corporation will be set up with shares at $10 each to enable every working man and woman to participate by owning at least one $10 share. In order that the corporation is really an organization of the people and is not monopolised by a few big shareholders, no person shall be allowed to hold more than 50 shares."

This, in short, was the purpose of the introduction of this Bill at the last sitting.

The Bill, as it stands, provides for an authorised capital of $10 million divided into one million ordinary shares of $10 each. The holding of the shares is limited to not more than 50 shares to be held by one individual and, in order that a check is kept that no person holds more than 50 shares under fictitious names, the identity card numbers are required to be stated on the applications, and they will be shown on the register and share certificates. Subject to this restriction, the shares shall be transferable in the market. In case of a loss to the people who are going to invest in this Corporation and who would presumably come from the middle class and lower class earning group - because this Corporation is intended to give them an opportunity to invest money in an industrial enterprise which is considered profitable by the Government - all shares shall be guaranteed by Government at par. The issue of shares shall be at the discretion of the Board of Directors in amounts which are considered to be necessary but they are not to exceed the authorised capital. That means that the Directors can float shares to the number that they think is desirable for any particular venture, but the total of such floatation at different times should not exceed $10 million, and all issues shall rank equally with one another so that there will be no preferential treatment of one issue over a later or an earlier issue.

There is a limitation in the Bill placed on the investment of the funds of this Corporation, and the limitation is that the Corporation shall invest its funds in industrial ventures only on the written invitation of the Industrial Promotion Board. Now this safeguard has been put in because it is possible that the Directors might venture to invest in fields which might not prove to be profitable because there has not been sufficient investigation beforehand. Consequently, this is to safeguard the poor man who is likely to own shares in this Corporation. Of course, in case where the Corporation holds funds surplus to its requirements for investment in industrial purposes, the Directors will have power to invest such surplus funds in gilt-edged securities. The word "gilt-edged" is not specified as such. The words used in the Bill are "trustee securities or placed on deposit in banks". Therefore, there need not be any idle capital lying with the Corporation which may not earn any income but, of course, the income from such investment would be limited to the rate obtained for such type of investment.

Now, as regards the control of this Corporation, it is proposed that the Chairman shall be nominated by the Minister, that the Minister shall appoint three Directors for varying periods, and that the Chairman and these three Directors shall form the initial Board of Directors. They shall have powers to carry out all deeds and acts pertaining to the good conduct of the Corporation and its investments. But the Corporation shall hold a general meeting within one year of its incorporation, unless it is proved to the satisfaction of the Minister that, due to unforeseen circumstances, an extension is necessary, in which case the Minister can extend the period by a further year. At this first annual general meeting, the shareholders shall elect three Directors, and after such elections, the Board of Directors shall be composed of the Chairman, three appointed Directors and three elected Directors.

The Corporation will also be empowered to nominate such number of its Directors as is necessary on the Board of other companies in which it is participating with capital, but, of course, the Chairman shall always be a nominee on such Boards of participating companies.

In order that the control in the general meeting does not go to persons who are bent on trying to get control in their hands, a further stipulation limits the number of proxies that any shareholder may hold, and that limit is placed at 20 so that manipulation by shareholders interested in gaining control cannot conic about because no person can represent more than 20 as proxy.

Sir, this is the first step, and I think a unique step, to bring the people of Singapore into partnership in industrial expansion. But, as has been announced in my statement, as a first stage the Government proposes that this Corporation should participate only in the cigarette industry and the matches industry, because, on investigation, I am satisfied and so is the Manager of the Industrial Promotion Board -

Mr Lee Kuan Yew: On a point of information, Sir.

Mr Speaker: If the Minister will give way.

Mr J. M. Jumabhoy: Certainly, Sir.

Mr J. M. Jumabhoy resumed his seat.

Mr Lee Kuan Yew: Assuming the Bill is passed today, could the Minister tell us how long he expects it to be before this Corporation begins to participate in these industries?

Mr J. M. Jumabhoy: Sir, the length of time before this Corporation starts participating depends, first, on the amount of support the Corporation gets from the people of Singapore; secondly, it depends on the negotiations that have to be finalised with outside manufacturers, if they wish to come in, before a cigarette venture is started. Therefore, it is difficult for me at this stage to give any definite indication of the period of time that will be required.

Mr Lee Kuan Yew: On a further point of information, Sir.

Mr Speaker: Will the Minister give way?

Mr J. M. Jumabhoy: I think, Sir, the Member can speak when I have finished, and I will reply to him then.

As I was saying - before the hon. Member disturbed my trend of thought - this is the first step in Singapore where the people are asked to participate in Singapore's industrial expansion and in ventures which are considered to be safe investments and profitable.

Sir, many Socialist Parties and individuals profess a desire to bring about Socialist policies and so on. This is not "Socialist" in the sense that the Government controls a particular industry. When they say a socialised industry, they mean normally a nationalised industry - an industry that is owned or run by the Government.

This is a genuine effort to get the people of Singapore, the common man or woman in the street, to participate in profitable ventures. It can be termed. Sir, a democratised socialist venture. I am not good at coining such words - the Member for Tanjong Pagar is, and I am sure the Minister for Communications and Works is equal to him in that respect. But I, Sir, am not a politician by-

Mr Lim Cher Kheng: Nature!

Mr J. M. Jumabhoy: Not by nature, but by inclination; neither am I a politician by profession. Therefore, I confess I am not up to arguing with the Member for Tanjong Pagar about terms of that sort. However, when this Corporation is initiated, I hope, and I am almost sure, that the people of Singapore will meet it with the confidence that it deserves.

Sir,I beg to move.

Question proposed.

3.35 p.m.

Mr William Tan (Tiong Bahru): Mr Speaker, Sir, as the Minister for Commerce and Industry has said, it is a unique step, and the Government, after 3½ years in office, is making a genuine effort to help the working man and working woman in Singapore. But what I cannot understand is why this Bill, if it is so good, was not introduced much earlier when the Labour Front Coalition Government came into power?

Sir, we know the tragic events during the last 3½ years which have proved to the people of Singapore that the Labour Front Coalition Government is not in a position to run the affairs of the country efficiently. This Bill is very beautifully put up and introduced by the Minister for Commerce and Industry. I am referring to clause 5 (2) at page 2 which says : -

"All shares of the Corporation are hereby guaranteed at par by the Government."

The Minister has just informed the House that this Bill is helping the working man and working woman. Such people are going to invest their money earned through sweat. They are going to invest in, say, 50 shares at $10 each in this Corporation. Will Government guarantee a return of profit? If the Minister is so sure of making money out of this Corporation, it may as well guarantee a profit. If a person puts money in the bank, Sir, he can at least get 4 per cent interest. Today, the people may have money to invest in the Corporation, but tomorrow they may need the money, in which case can Government accept the surrendering of the shares and pay back to the investor the money he has invested?

Sir, I have no quarrel with Government's intention to help the working man and working woman. I am here to see that their interests are protected, and that their money is not lying idle in the Corporation.

Do you know that, if you put in, say, $500 today and you withdraw it after 10 years, that $500 will be of no use? Sir, $1,000 was a very big sum prewar. Today, you insure a person's life for $1,000. After 10 or 15 years, when you get the money back from the insurance company, it is worth only $100.

Sir, what I am very concerned with is this-if the Government is sincere in its effort to help the people, it must make it plain to them that their hard-earned money will be protected.

Sir, this Bill is indeed a unique step.

3.39 p.m.

Mr Lee Kuan Yew: Mr Speaker, Sir, if I were to run an essay competition on "How to interest the people of Singapore in industrialisation", I would award the Minister for Commerce and Industry the first prize. I think this is one of his bright ideas - it is worth a debate, certainly worth looking into, and most certainly will come to nothing.

We spent some time, not long ago, in 1957, discussing the $1 million Singapore Industrial Promotion Board. It has come to nought. At that time we were told how the $1 million, by a series of geometrical progression, would lead to investments worth millions of dollars. It seems one lends $1 million; the part paid back is lent out again; it comes in one end and goes out the other end, so that although the capital investment is only $1 million, yet in effect the total stimulus given to industry would be worth many millions.

I see from the Press that the Chairman of the Board, who was connected with the Manufacturers' Association, has relinquished his post. I have asked the Minister just now how long it was before he expected to do anything about this Bill, provided it is passed today and the Governor gives his assent at the earliest possible date. He knows, as well as we do, that at the outside his Government has got up to the 2nd July to do anything about it. Nobody is likely to get anything going within the time at his disposal. We are just arguing a purely hypothetical and academic Bill for the purpose of satisfying the ego of the Minister for Commerce and Industry.

Sir, to argue on this purely academic Bill to its academic conclusions, may I ask him, before I proceed, just how he proposes to prevent a person from capturing control, beneficial control and not nominal control, of more than 50 shares? The Schedule says:

"No person shall be permitted to hold more than fifty shares and no further shares shall be allotted or transferred to any person who already holds fifty shares in the Corporation."

It does not say anywhere that no person shall pot hold 50 shares in trust for somebody else. Therefore I can well go and round up 5,000 people, and get each to hold 50 shares each in trust for me. There is no law against this and, therefore, if his Investment Corporation and his cigarette factory are a roaring success, far from the Minister making large numbers of people becoming small property-owning democratic supporters of the Singapore People's Alliance, he will be creating a situation in which a great number of speculators and racketeers will pounce on the shares they have captured the beneficial control of.

However, be that as it may, in principle, I expect it is as good as any of the schemes which his Government has thought out. How do we get votes? By putting money in people's pockets! How do we put money in their pockets when they do not have confidence in us? Take public funds and guarantee that they would not lose the money. But then, as the Member for Tiong Bahru says, why not guarantee a profit too? I am quite sure the imaginative Minister for Commerce and Industry did not think this one out. Had he thought of it earlier-

Mr J. M. Jumabhoy: I had!

Mr Lee Kuan Yew: He had indeed! Then he might very well have forestalled the question put to him by the Member for Tiong Bahru.

But as a matter of practical politics, the Minister knows well that this is just another statute which will lie quietly on the Statute Book. He can do nothing about it, and if he does, he may come to grief!

3.44 p.m.

Mr Lim Cher Kheng: Mr Speaker, Sir, this House must indeed be very pleased to witness today two major Parties denounce Socialist economic policies. The P.A.P. yesterday said that as long as the economic situation of Indonesia and the Federation of Malaya remains unchanged, they are not supporting any major changes. And now the Minister for Commerce and Industry stands up to say that this project, which we are now debating, is not a Socialist measure.

Talking about industrialisation, I wonder whether you have been disturbed sometimes by any foreign visitors. When the visitor pesters you to take him round Singapore, and you bring him up to Mount Faber, you will have a nice view of the whole of Singapore at your feet. And the most striking scene is the harbour - with so many ships - yet not even a smoking chimney which is indicative of an industrial city. This is the industrial effort which all politicians are shouting about highly!

Now, Sir, at least the Minister for Commerce and Industry honestly tried to put up a scheme. I will agree with the criticism that the life of the present Government is too short to give effect to this scheme, but at least the Minister's purpose and determination is good and the scheme is worth considering. The leader of the P.A.P. should follow this example.

Those who thought of this scheme are honest because they were elected on the socialist platform. They have promised to provide every opportunity for the people. So even in the last few hours which they have, they want to work out a scheme to provide an opportunity to the people to participate in a business venture. They are not like so many selfish socialist leaders who are extremists and only know how to strike and strike until all the factories are shut down. Then they will say that until we merge with the Federation of Malaya we cannot solve our problems. They only talk and talk, and come to this Assembly and blabber, blabber, blabber-

Mr Speaker: Order. I take it that the hon. Member did say "blabber" and not "blubber". I do think that "blabber" is not quite a parliamentary word to use in this Assembly. I ask him to withdraw the word "blabber".

Mr Lim Cher Kheng: Sir, I will obey your order. I beg to withdraw the word. Sir, in principle, this project has won my hearty support, and I assure you that the working class, the masses, will open their eyes and judge for themselves whether the Minister for Commerce and Industry is doing the right thing or the wrong thing, and whether he will succeed or not. Anyway, this scheme is an attempt to provide for more jobs, and what is more important, that the Minister has the courage to challenge the import or business houses which have long been monopolised by the Europeans. Sir, the task is big but the Minister has the courage to undertake this project.

Sir, in the speech which the Minister for Commerce and Industry has just delivered, there are a few important points where I am sure he has failed to convince us. The first point is whether he can tell this House when this project can really be put into effect. Secondly, even if we start manufacturing our own cigarettes, will the Minister prohibit the import of any foreign-made cigarettes into Singapore? Thirdly, will this restriction affect one of our main sources of revenue? So I hope the Minister for Commerce and Industry can give us a detailed explanation of these three points.

I also support the Member for Tiong Bahru when he says that Government has a duty to give assurances to the investor, especially as it is the Government itself which intends to invite the lower income group to be shareholders. I sincerely hope the Minister for Commerce and Industry will also give us a satisfactory reply to this point.

Lastly, I wish the Minister can inform us whether, since he first brought out his idea about this scheme in this House, ally preparations have been made regarding the recruitment of workers, the purchase and installation of machinery, etc., because you must have a blue-print of your plan in your Ministry. It is high time for you to let us know in detail the type of preparatory work you have done.

Mr Speaker: Order. I do not think that I am in possession of the secrets of the Ministry. Perhaps the hon. Member has forgotten that he is addressing the Chair.

Mr Lim Cher Kheng: I beg your pardon, Sir. Another point - it looks as if it is too much for the Minister for Commerce and Industry to give any assurance - how much confidence has he, and what method does he intend to use to change the smoking habits of our people here? There is a piece of information supplied by the Hon. the Financial Secretary in answer to a question (No. 2) on the Order Paper of 21st January, 1959 - that is the average monthly releases, by grades of cigarettes from bond in 1958. There are so many different grades - Grades D, C, B, B1 and A - and I am sure all hon. Members will discover the differences in choice. Grade B is far bigger than all the other brands put together. This shows that the smokers in Singapore have their own choice. For example, Grade B is 165,712 pounds compared with Grade D which is only 76,190 pounds, and Grade A is 42,857 pounds. We come now to the prices. There are also great differences. Grade D, c.i.f. per 1,000 sticks is $7.50 and less than $10.50 compared with Grade B which, as I have just quoted, has a bigger sale and which is $13.50 and less than $15. Sir, all these differences show that there is a connection between the sale of cigarettes and the choice of the smokers. Therefore, what are the grounds for the Minister's confidence, and what are his methods for implementing this project, if he is so sure that the project will meet with success?

3.55 p.m.

Mr R. Jumabhoy: Mr Speaker, Sir, this is another Bill which-

Mr Lee Kuan Yew: We will have to foot!

Mr R. Jumabhoy: as the hon. Member for Tanjong Pagar has said, will remain on the Statute book and nothing more. It is a mere waste of time to speak on this. However, a warning is very necessary to the public. It is a stunt. Am I in order to say "stunt", Sir?

Mr Speaker: Order. Perhaps, as the hon. Member is rising on a point of order on himself, I had better rule that "stunt" is out of order. Please withdraw it.

Mr R. Jumabhoy: Thank you for the guidance, Sir. I withdraw it. It is a political stuff which is not easily consumed by the public. At the outset, it has been said that the scheme is to help the poor man in getting into a venture or industry and making a profit out of it. In case of loss, this Government, or any future government, will guarantee to pay the money back. He can within three months get his money back. That is the safeguard. But as my friend and colleague on this side of the House, the hon. Member for Tiong Bahru, has said, if a poor man has saved his well-earned money by hard labour, he expects a return. But after years and years of investment, there may be no returns. In case of a loss in business, he gets back his capital; but where is his profit? You may put your money in a savings bank for so many years and you can expect to double it. You put in an insurance policy and you may get a return after some years. But in this scheme there is no such guarantee.

On the other hand, Sir, even if this Bill is passed, I think there is no value whatsoever. Can a poor man put his trust in this Bill when it is brought out by the ex-members of the Labour Front? Now, they do not represent the workers. How can the workers trust these people by putting their good money into this venture? I cannot understand at all. They will have to wait till the next government comes in and find out what the policy of that government is before they will consider taking a lead and invest in this project, but not when the present people are in power.

Sir, there are many industries. If you go through the share market reports you will see that the shares offered vary from 50 cents to any amount above that. You can buy them and make a profit. A small man can even buy $1 worth of shares or $100 worth of shares. There are some returns which we see every day in the open list of the share market reports. These investments are available and more profitable to them. Will they venture to go into something which is an unknown quality and with no return?

Mention was made about cigarettes and matches. If the idea is to invest the small people's money in this way, the small men, instead of reaping a harvest from their investment, will have to buy their own cigarettes and matches at a higher price. In other words, they will not only put in their own money, but they will also have to pay a higher price for the same thing which they are getting in the open market at competitive prices. I do not think anyone has given thought to this. A reply will be very interesting.

Then to make it competitive as far as selling is concerned, you will have to give them a preferential or tariff duty. The common men will be prevented or will not be able to afford and enjoy the various brands at their disposal. Of course, they will be at a higher price because of the present Government's taxation and duties. Moreover, the people will be handicapped because they are used to a particular thing and they cannot get it. They will then say, "Well, I have invested more than $10, but now I have to pay another $10 per month to buy my own cigarettes or matches. It is so very much more." It will be another burden to them.

Sir, in the end, this Bill is nothing but a farce.

Sir Ewen Fergusson: Sir, for $10, a working man can make an investment in a very successful industrial concern, at the present time. This scheme, I am sure, will be measured by the number of subscribers who are willing to put money in it. I am not certain whether the idea is that they put the money in first and then the investments are made afterwards, or the investments are going to be carefully worked out and then the members of the public will be asked to subscribe to something which might or might not be a success. But the Minister for Commerce and Industry has stated that he has complete confidence in the success of cigarette making and match making. It might well be better if the Government experimented with any project first - if it is really successful, then give the members of the public a chance to invest in something that is successful.

One other point which I would like the Hon. Minister to answer. Will this corporation be subject to income tax like all other trading corporations?

4.04 p.m.

Mr Tan Siak Kew (Nominated): Mr Speaker, Sir, this People's Investment Corporation Bill appears to a man in business to have some catch somewhere. I really cannot understand how this thing can work.

First of all, I refer to the explanatory statement. It says that there will be a contingent liability on Government funds in the case of total loss of capital up to the amount of shares issued but which cannot exceed $10 million. This, of course, refers to the Government's guarantee to redeem at par if there is a loss. But if it is a total loss, I can imagine that it will exceed $10 million because, according to the Bill, there is a Board of Directors, to be appointed which will necessarily involve administrative expenses - Director's fees from year to year. The eventual loss, if it is a total loss at all, must exceed $10 million; that is, if the shares are taken up to $10 million.

Another point is that the posts of the Directors - there are six or seven to be appointed -seem to me to be sinecure, because the Directors are only there to be recommended by the Industrial Promotion Board what to invest. They themselves have no discretion to manage or to invest in any ventures which they might think fit. This $10 million is after all public money, which, in the event of failure of a venture will be lost.

Another thing is that I have very grave doubts whether anybody will subscribe to the shares of this corporation. First, it is limited to 50 shares of $10 each, which is $500. No doubt, the intention of the Hon. Minister for Commerce and Industry is good and he probably has at the back of his mind the idea that these people are to be working men and women. But there is no provision here that if, for instance, Members of the Assembly were to be interested in the shares and they are not, in the sense as implied here, ordinary working men and women - they would be debarred from buying these shares.

Imagine the ordinary working men and women who have saved $500 to invest. Surely with no assurance of profit they could be more well advised to invest in City Council loans which at the present market value yield a sure return of about six per cent a year, instead of venturing. It is not a venture, in the real sense of the word, but still it is in that they will have to put away the $500 maybe for a period of five or ten years without any profit or any dividend at all, although they may be assured that in the case of loss they can still get their $500 back.

Again, there is one thing which is not very clear to me. That is, people who want to buy shares need only show their identity cards. Persons of 12 years old have identity cards, and presumably they will be allowed to buy shares. But when a transfer comes along, would they, being minors, be legally allowed to transfer those shares?

It seems to me that, as I see it, there must be a catch somewhere. Otherwise, I do not see how this thing could succeed.

Mr J. M. Jumabhoy rose-

Mr Speaker: Mr Jumabhoy, in reply?

Mr J. M. Jumabhoy: Sir, it is often said that a little knowledge is dangerous. But today I discover that no knowledge aired in public is more dangerous.

Sir, I am curious. I can understand the motive of the hon. Member for Tanjong Pagar. He is really frightened of this. He knows - [Laughter.] What is the good of laughing aloud? He knows that if this venture were to be brought about successfully - he will, of course, see that it is not, I know that - then his voters will say, "Yes, the P.A.P. is good; but look at these chaps - Jumabhoy, Lim Yew Hock and company. They have also done something good for the people." He is afraid of that. I know that, Sir. He was speaking so surely and so fervently that this venture would come to nought. I wonder, Sir, what is going on behind the scenes.

Before I made this statement on the 10th of September last, I had been negotiating with the British American Tobacco Company, who control about 80 per cent of the cigarette trade here, to manufacture here on this basis: 49-49-2. The effect would be that the people will not be forced to smoke other cigarettes. You will get your Players, Capstan and Double Ace. Only, instead of being made in England, they will be made here, and instead of the B.A.T. taking 100 per cent profit, they will only take 49 per cent and the people of Singapore will get 49 per cent.

But now, Sir, I am not so sure, with the Member for Tanjong Pagar stating so surely that this will come to nought. Something is going on behind the scenes and the P.A.P. is capable of doing its utmost to destroy a political opponent. That I know. But the people will know that if this venture does not come about, there will be nothing better for the Member for Tanjong Pagar, and probably they will then be suspicious whether or not somebody has done something to bring this venture to nought in the interests of a political party, not caring for the interests of the people of Singapore.

Negotiations are still going on with the B.A.T. but these could not be finalised because this Bill is not law yet. That might have taken the wind out of the sails of the Member for Tanjong Pagar. But I do not think so, Sir. He was well aware that these negotiations were going on. In fact, he saw the people concerned when they were here in September last. That is why I am suspicious that something behind the scenes must be going on.

Sir, the Member for Tiong Bahru has said that the Government has been 3½ years in office and has done nothing. Sir, everything is not done the first day the Government takes office. Things have got to be worked out. If things are worked out and they take two or three years, we are too late. If things are done quickly, then they are thrown before the House without proper study. Either way it is the Government at fault.

Mr Goh Chew Chua (Ponggol-Tampenis): This is the proper time to buy votes!

Mr J. M. Jumabhoy: Sir, if I reply to that, I will have to give a lengthy newspaper quotation of what has happened-

Mr Speaker: Order. I am not quite certain what that remark was. If it is a point of order, I would like the Minister to raise it as a point of order; otherwise that remark must be struck off the record.

Mr J. M. Jumabhoy: No, Sir, I do not want to raise it as a point of order. I know the Member does not mean anything bad. "The Government is paying money to buy votes" - he means that this is-

Mr Speaker: Order. Now that that expression has been disclosed, I would ask the hon. Member who used that expression to confirm that he did mention those words. If the answer is in the affirmative, he must withdraw that expression. Mr Goh.

Mr Goh Chew Chua: Mr Speaker, Sir, I quite agree with the Member for Tanjong Pagar, who just now said that the Government has been here for more than 3½ years-

Mr Speaker: Order. Will the hon. Member please inform the House whether he alleged the Government was buying votes?

Mr Goh Chew Chua: Mr Speaker, Sir, if you object, I withdraw the expression.

Mr Speaker: Thank you.

Mr J. M. Jumabhoy: Sir, the point was raised by the Member for Tiong Bahru and one or two other hon. Members as to why the Government does not guarantee a return of profits. Government has guaranteed the money on the original shares and so nobody will lose his money.

Mr Lee Kuan Yew: Profits!

Mr J. M. Jumabhoy: The Government does not guarantee profits.

Mr Lee Kuan Yew: Why?

Mr J. M. Jumabhoy: It will be noticed that even if no investment is made in an industrial venture, the directors have the power to invest in trustee securities and therefore some income would be accruing to the shareholders. But if the Government gives guaranteed returns, then it does not become a business venture, but a gilt-edged security comparable to any debentures or any Government or City Council loans. That is not the intention of the Government. Government's intention is that the people of Singapore should come into a business venture where they cannot get a guaranteed return, but because the shareholders are going to be the poor people, Government says, "You shall not lose. We shall guarantee you against any loss." But that is as far as the Government can go. And since it is going to be a business venture, you take your chance; instead of the Government guaranteeing you five or six per cent, which is a meagre flea-bite in the light of today's earning capacity, you can get 40 or 50 per cent if the Corporation makes a profit.

I have already mentioned about the Member for Tanjong Pagar being so sure that it will come to nothing. He said the Industrial Promotion Board can do nothing. That is not true.

The Industrial Promotion Board has done some work. It has lent out some money. It is furnishing the Government with a lot of industrial technical information and also giving assistance to industries. But I am surprised why the hon. Member is so sure that this will come to nothing.

Mr Lee Kuan Yew: Judging from your past performance!

Mr J. M. Jumabhoy: Judging from the Member's cleverness, Sir, in fighting political battles, I will not be surprised if his prediction comes true because of something going on behind the scenes. The moment I discover that, I am going to expose it. In fact, I have certain information, but I do not consider it fair to disclose it now because I am not really satisfied yet. I do not want to make use of the privilege of this House by levelling accusations against the hon. Member's Party.

The hon. Member said this move was to bolster the ego of the Minister. Because of politics, any sincere attempt is always twisted. Politicians in the Opposition do not care whether a move is beneficial to the people. They only care that the move shall be frustrated for their own political manoeuvring. That is very bad and I am against that sort of thing.

The Member for Changi raised sensible questions. I did not say it was not a socialist measure. I said it was a democratic socialist measure, not a socialist measure in the normal sense that the Government owns the enterprise. Then he asked me when it is expected to be brought about. I think I covered that point at the beginning when I said, in answer to a query by the Member for Tanjong Pagar, that that depended on the response of the people and on the outcome of negotiations now going on with the B.A.T. and also with other companies possibly. Then the hon. Member asked me whether the import of cigarettes would be prohibited. Sir, in my statement I have said that restrictions will be placed on the import of cigarettes when this project is brought to fruition. Restrictions could be in the form of either quantitative restrictions or by imposing a higher duty on imported cigarettes. A natural restriction would be brought about thereby. We do not contemplate a total prohibition in the initial stages at least, but it remains to be seen how the venture goes and whether there is too much of smuggling because of higher duties on imported brands. Smuggling could increase the quantity of imported cigarettes in which case prohibition would probably have to come in.

Then the hon. Member goes on to ask me about the revenue angle. The Member for Tanjong Pagar was sure that there will be loss in revenue. The answers to questions supplied by the Hon. the Financial Secretary yesterday are pertinent. If you take one item, Player's Medium, according to his answer given orally yesterday, it beats all other brands in the same grade. It means that the release of Player's Medium is more than fifty per cent of Grade B cigarettes, which total 66,285,000 sticks a month. Sir, the release of Player's Medium is more than 33 million sticks a month. Therefore, if we take as an example, we will see that the duty element on 1,000 sticks is $19.44 and the retail price is $40. That means that the retail price is four cents a cigarette. The duty element is 1.944 cents, which means that it is less than two cents a cigarette, and therefore the cost of the actual cigarette minus the duty is just a little over two cents to the consumer. Now, that duty element is on imported cigarettes. The present duty on tobacco for manufacture is very low. I think it is $2.50 or something like that per lb. The duty element works out at half a cent for the locally manufactured cigarettes. Now it is very easy to put an excise duty on local manufacture to the same level of $19.44 per 1,000 sticks and that is roughly two cents a cigarette.

Mr Lee Kuan Yew: On a point of information, Sir.

Mr Speaker: If the Minister will give way.

Mr J. M. Jumabhoy resumed his seat.

Mr Lee Kuan Yew: On a point of information. How many local manufacturers of cigarettes are there at the moment and how many of them would be put out of business as a result of this?

Mr J. M. Jumabhoy: There are three local manufacturers. I do not contemplate that they will be put out of business because certain arrangements will be made with them. I have said so in my previous statement too. If only the hon. Member would care to look it up in the Hansard, it will be to his benefit.

Now supposing you take the two cents original cost of a cigarette to the public without the duty element, the local cigarette would then sell at two cents plus half a cent duty - 2½ cents. The imported cigarette would sell at two cents plus two cents - four cents. If you keep it at the same price of four cents a cigarette to the public and, instead of import duty, you put an excise duty raising it from half a cent to two cents, your revenue is then guaranteed. You then raise your duty on imported cigarettes from two cents to four cents each - this is just a case in point - and your imported cigarettes will cost the consumer six cents each, your locally-made cigarettes will cost him four cents each, as the imported cigarettes are costing him now, and the duty element will be the same. Therefore, there can be no loss of revenue. It is simple, Sir, to work it out, but hon. Members are not inclined to apply their minds to it, because they are afraid and they want to oppose it for political reasons.

Now we come to the Hon. the Financial Secretary's reply again, and it shows us that the cost of a cigarette retail, minus the duty element, to the public is two cents - the retail price of a cigarette is nearly two cents if you ignore the duty element. It is common knowledge, Sir - you ask any retailer about this as it is not a secret - that the retailer is getting eight per cent profit on his sales. When the retailer gets eight per cent, it is normal to expect the wholesaler to get a quarter of that - about two per cent. Let us be charitable and say that the wholesaler gets three per cent. That means 11 per cent in all out of that two cents on four cents - 11 per cent on the four cents is a safe basis - goes to the wholesaler and the retailer. Now, if you work out 11 per cent of four cents, you get .44 cent on your one cigarette. If you take that away from two cents, you still get about 1.6 cents, which is the price charged by the importing firm to the wholesaler. This is all worked out. I am not letting out any secrets and anybody possessing intelligence can work it out. Therefore, 1.6 cent is the price charged to the wholesaler by the importer. I have been to America and the Philippines and I have studied the costing of the cigarette industry thoroughly. You can buy American Virginia tobacco. We have got confirmed offers from the United States of Virginia tobacco which is used in all the English cigarettes. These tobacco cigarettes are called straight Virginias. You can buy it today ready cut for making into cigarettes with all the flavoring and so on. The maximum price you pay is U.S. $1 per lb., that is M$3 per lb. For 1 lb. of tobacco, you get 400 to 420 cigarettes. The tobacco in a cigarette therefore costs ¾ cent. But you never use all Virginia tobacco. You use 30 or 40 per cent Rhodesian tobacco, because Rhodesian tobacco has a better colour; the Virginia tobacco has a more pungent odour and therefore you blend it with Rhodesian tobacco. The cost of Rhodesian tobacco is half that of Virginia tobacco. If you use say, 40 per cent of Rhodesian tobacco, then your cost comes down by 20 per cent on your whole cigarette and that will cover the paper, the labour and so on. So, in effect, your cigarette should cost you well under one cent and therefore the profit factor in a cigarette is more than ½ cent per stick. I am well convinced that it comes to ½ cent per stick. I have worked it all out and the Manager of the Industrial Promotion Board, who is an experienced man, has also worked it out. I have checked it in Manila and have re-checked it in America. The profit element is a little over 4 cent per stick on the medium grade cigarettes, not on the very low grade cigarettes. Sir, the answer to yesterday's Oral Question 2 (a) is that one month's consumption is 152 million cigarettes which works out to 5 million sticks a day. Five million sticks a day at half a cent profit on each stick will give you a profit element of $25,000 a day. If you work it out further, it will give you $750,000 a month or $9 million a year. Am I a criminal, Sir, if I want the people of Singapore to share half of this $9 million profit a year? I am labelled by the P.A.P. as one who thinks of imaginative schemes. Let the people know, Sir, who is right. If there are no machinations going on, this scheme will come to fruition. If machinations are going on, if threats are held out to the foreign investor that, "if the Government changes, we will see you if you come to agreement with this Government", or if the olive branch is held out, "We will give you better terms than the Lim Yew Hock Government gives you", then the people will know - and one day I am going to publicise what terms we are offering in case another Government tries to give better terms - which government was beneficial to the people or which Government sold them out. Anyhow, all that I am trying to do is to give the people a half share-

Mr Lee Kuan Yew: May I ask the Minister a question on a point of clarification, Sir?

Mr Speaker: If the Minister will not mind giving way.

Mr J. M. Jumabhoy: Sir, I do.

Mr Lee Kuan Yew: Afraid?

Mr J. M. Jumabhoy: I am not afraid, Sir, I have had enough from the Member for Tanjong Pagar. Sir, if only the Member for Tanjong Pagar had less of the ego in him and gave credit to others also for having some brains - which he does not do - he would not have made me reveal all these figures. He has shown his ignorance of the issue.

Mr William Tan rose -

Mr Speaker: On a point of information?

Mr William Tan: Yes, Sir. As regards the figures put forward by the Minister for Commerce and Industry, I would like to know whether the quantity of cigarettes smoked by the public will increase or reduce.

Mr J. M. Jumabhoy: Sir, that is a hypothetical question. The quantity smoked is 5 million cigarettes a day. If you give them the same brands made in Singapore with the same formula and with the same Virginia and Rhodesian tobacco mixed, I do not see why there should be a switch to other brands. The switch can only come if, because of machinations, foreign firms refuse to participate. We will then be forced to make our own cigarettes. Even then, Sir, I have had the assurance of dealers of an adequate supply of tobacco. Believe me, Sir, a cigarette is not a difficult thing to manufacture. In Thailand they are doing it, and their quality is acclaimed to be as good as that of any imported cigarettes. Though the Member for Tanjong Pagar may laugh, Sir, he knows in his heart that it is true, that it is not something that is so difficult that you cannot make it here. You can make cigarettes of an equivalent quality here.

Mr Lee Kuan Yew: On a point of clarification, Sir.

Mr Speaker: If the Minister will give way.

Mr J. M. Jumabhoy: No, Sir, Now, I think that has answered the question of Sir Ewen Fergusson why the Government should not start it first. My intention is that the public should participate in it.

I have nothing further to add to what I have said. I think I have clarified the position enough and the public will not be under the impression that this is an attempt at a political stunt, as put by somebody. It is not, Sir, It is a genuine attempt to give them a share in this venture with millions of dollars' profit accruing to outsiders.

Mr J. M. Jumabhoy resumed his seat.

Mr Lee Kuan Yew: On a point of clarification, Sir.

Mr Speaker: The Minister has sat down!

Question put, and agreed to.

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

Assembly immediately resolved itself into a Committee on the Bill.-[Mr J.M Jumabhoy]

Bill considered in Committee.

[Mr Speaker in the Chair]

4.32 p.m.

Clause 1-

The Chairman: There is a note of an alteration,

In page 1, line 5, to leave out "1958" and insert "1959".

That will be done.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3-

The Chairman: I am going very slowly through this Bill because I do not think it will be beyond hon. Members, if they wish to, to make further comments on the clauses as are appropriate.

Clause 3 ordered to stand part of the Bill.

Clause 4-

Question proposed, "That clause 4 stand part of the Bill."

Sir Ewen Fergusson: Sir, will the Corporation be exempted from income tax or will it pay taxes like any other Corporation?

Mr J. M. Jumabhoy: Sir, the Corporation will pay tax just like any other public body, but the joint enterprise or the cigarette venture or whatever venture it is, could apply for pioneer status under the Pioneer Industry legislation, just as any other private company could. Government's intention is, before any floatation is made, to put up a prospectus to show them what the profits are on that particular venture.

Question put, and agreed to.

Clause 4 ordered to stand part of the stand part of the Bill.

Clause 5 ordered to stand part of the stand part of the Bill.

Clause 6-

Question proposed, "That clause 6 stand part of the Bill."

The Chairman: If any hon. Member has any comments to make on the Schedules, this is his opportunity to do so.

Mr Lee Kuan Yew: Sir, since you have indicated that this is an appropriate time to consider the Schedule, I would like to draw the House's attention to clause 1 (1) of the Schedule:

"No person shall be permitted to hold more than fifty shares and no further share shall be allotted or transferred to any person who already holds fifty shares in the Corporation."

Sir, I am not as good as the Hon. Minister for adding and subtracting but it seems to me that if each person took up $500 worth of shares, there will not be more than 20,000 investors. In any case, according to the Property Survey Report, there are no 20,000 people with $500 to invest. But - and this is just by way of an opening remark to preface my point - if, in fact, the Minister's intention is not to help the middle class to become richer, but to help the worker to become petty bourgeoisie, then surely he does not want to extend the investment to the amount of 50 shares? He should limit it to a figure much lower than that. Therefore I would like to ask him now to consider whether he would like to reduce the figure - if it is meant for the workers, and not for the middle class - to reduce it to 10 shares, because the average worker has not got $100 to invest. That is the first point. I will therefore, at an appropriate time, Sir, move an amendment to reduce from 50 to 10.

Secondly, the Minister has not answered my point-although I see he was in consultation with his legal adviser. There is no proviso anywhere in the Schedule to prevent the beneficial holding of more than 50 shares. And I think he knows the answer. He is such a bright man that when it comes to a sticky question, he prefers not to answer it: that is why he did not want me to ask questions. The point is: there is nothing in the Schedule to prevent one man beneficially holding $10 million worth of shares. The Schedule says:

"No person shall be permitted to hold more than fifty shares and no further share shall be allotted or transferred to any person who already holds fifty shares in the Corporation."

Clause 1 (2) reads:

"No share shall be allotted to any person unless such person has given in his application for the share the number of the identity card issued or deemed to be issued to him under the provisions of the Registration of Persons Ordinance, 1955; and such number shall be shown in the Register of Shares and on the share certificate issued to the person."

Sub-clause (3) reads:

"Subject to the provisions of this section, all shares shall be transferable."

Clause 2 (1) reads:

"The Directors shall have power from time to time to regulate the floating and issue of shares-"

and so on. Nothing prevents any man from being the nominal holder of a share and holding it in trust for somebody else. There is nothing in this Schedule to prevent a wealthy man from getting other people to buy all the shares for him and getting everyone of them to sign a declaration of trust that he is the nominal holder of shares for someone else. This is common practice - "I (so and so), who appear as the nominal holder of shares Nos. (so and so), hereby declare that I hold them in trust for (so and so)." In my view, all this is just so much sound and fury, and it is going to come to nothing. But since we have to be logical and pursue things to their logical conclusion-first, we should reduce the figure to 10 shares if we want to help the workers and not the middle class; secondly, we make it an offence for anyone to hold more than that either as nominee or as beneficial owner. Another proviso, a completely new proviso, will have to be worked out to make it an offence for anyone to hold it on trust for another beneficiary.

The Chairman: The hon. Member is, of course, out of time if he is thinking of moving an amendment, because under Standing Order 51, paragraph 2, "no amendment shall be proposed", that is to a Bill, "unless two clear days' notice thereof has been given." But, of course, the hon. Member may seek the assent of the Assembly under the provisions of Standing Order 23.

Mr Lee Kuan Yew: Sir, I will move an amendment under the Standing Order you have indicated.

The Chairman: At the appropriate time.

Mr J. M. Jumabhoy: Sir, if one cannot stymie the Government in carrying out something which is good, then one puts obstacles in the way. The hon. Member for Tanjong Pagar, who has a very good knowledge of the law, proposes to put obstacles. First, he mentioned the middle class bourgeois (and other political terms which the hon. Member is good at using). Sir, my intention is contained in my original statement which the hon. Member does not care to read-these shares are intended for the ordinary man and woman in Singapore. The middle-class man, that is the clerk, is also a working man. And any government does not necessarily look to the interests of the labouring class only but also to the interests of all the citizens, and the working class man, according to my definition, is also the clerk as well as the labourer.

This is an attempt, Sir, to gain further time to try to stymie the Bill. At the worst, he now tells the public that this is a capitalist government because it offers 50 shares and not 10 shares. He has failed in his attempt to convince his left-wing supporters through the Press that this is a bad move, because I have given all the points, the profit angle, and so on, and it will be very difficult for him to challenge me. Sir, I am not inclined to fall into the trap that 50 shares will create capitalism in the middle class. I am also not inclined to give my assent to his move to reduce the number of shares from 50 to 10. If he were genuine about it, he should have given notice; the Bill after it was introduced has been with him for nearly a month.

The other point he raised - and he is a clever lawyer - about a person holding shares in trust has got me confounded a bit. Sir, a simple mind like mine does not work out the intricate ways of overcoming the law, but a clever mind, like that of a lawyer of his calibre, would be capable of working that out. I am glad, Sir, he has pointed that out to me. And if we find later on that this restrictive clause is abused, then certainly an amendment will be moved at that time to remedy that. But one cannot foresee all the loopholes that could arise as a result of a new law, because if one did then the lawyers would have no income left. One would have plugged the loopholes at the outset, and there would be no lawyers, and the hon. Member would probably not be able to sit here.

Mr Lee Kuan Yew: That is the business of the Legislative-

The Chairman: Order. The hon. Member will have another opportunity to speak. We are in Committee.

Mr Lee Kuan Yew: Sir, first of all, I would like to point out to the Hon. Minister that if it is true, as he has admitted that he has a simple mind, then we should ask him to confine it to simple subjects. But when he has embarked on the intricate and highly complex business of floating something which is neither a co-operative nor a nationalised industry nor a mutualised industry, something that does not fall in all the known categories of political thinking anywhere in this world, when indeed he embarks on a highly complex and intriguing situation, we expect a complex mind to bring itself to bear on the problem with the thoroughness and expertise which have been lacking in this case.

It is no use his telling us that we will wait and see whether people abuse the lacuna that he has allowed within the Schedule. How and when is he going to find this out? Let me tell him this: we do not want to waste time to try and block this Bill. We know the Bill will be passed today. We have not the slightest intention of blocking it. We know it will come to nothing.

Further we will tell him this: unless he makes an amendment now - and he might obtain your permission, Sir, to get to work with his legal adviser for ten minutes. If he likes, I am prepared to give him my assistance free, to work out a clause to make it impossible for people to buy up shares in the name of the nominal holders. All this talk about nobody holding more than fifty shares: we will look after the clerk; we will look after the trisha riders; we will look after the taxi drivers; we will even look after the poor millionaires - all that it is going to do, if it is in fact the way he envisages it in his dream - the B.A.T. working hard to produce profits for him, and he says, "Ah, you people of Singapore, I have got the B.A.T. to work for you; 49 per cent - here you are." If it works out the way he dreams it, then we are all going to fall into the hands of a few racketeers who will corner the share market. That is all. And when he later moves an amendment, there will be a hue and cry against retrospective legislation. And one of the things that he will not be able to do without being accused of being undemocratic is to legislate retrospectively penal legislation of this nature.

Sir, let him consult his legal adviser. We are not in the least bit concerned whether this Bill goes through or not, but his legal adviser will tell him that it is wrong to legislate retrospectively on penal legislation.

Mr R. C. H. Lim (Nominated): Mr Speaker, Sir, my mind is sometimes simple, sometimes brilliant, but in whatever state my mind may be, Sir, I cannot visualize any one single millionaire in Singapore who will trust 1,000 individuals, unknown to him, with 50 shares registered in each of their names. If one such individual does not cheat him, others will. We may have some millionaires in this Assembly. Will a millionaire trust 1,000 individuals unknown to him, with 50 shares registered in each of their names in trust for him? So, Sir, although an amendment may be necessary for the purpose of preventing one or two individuals from abusing the intention of this Bill, the danger of having a millionaire investing hundreds of thousands of dollars in the name of 50, 100 or 1,000 individuals in trust for him, will never happen.

Mr Lee Kuan Yew: Sir, I feel almost abashed at the idea of a trade union lawyer trying to give advice to a rich man's lawyer. If accompanying the document of trust you also hold the shares and make sure you send your representative to collect the dividends on the basis of the shares, surely a rich man's lawyer like the hon. Member Mr R. C. H. Lim could well work out - and I am sure he must in his long and successful career at the Bar have worked out - one thousand and one guarantees to make sure that the money having been transferred and all the formalities having been gone through, there is a sufficient grasp on the documents to prevent any swindling. I do not want to be accused of having joined the fierce people who constantly terrify the Minister for Commerce and Industry and make him go into sudden and unexpected retreat. But I would ask him, with your consent, Sir, to adjourn this House for ten minutes and work out a new clause so that it becomes penal before it comes into operation.

I spent some time in New Delhi recently discussing the rule of law. The Attorney-General will be interested to know this, one of the fundamental principles which was upheld was that there should be no penal legislation which is retrospective. You can have retrospective civil legislation. You can try and right something which was done wrong; but if a man has already acquired a beneficial interest in 100,000 of those shares and you then make it a crime retrospectively, it is contrary to the rule of law. So, I would suggest a ten-minute adjournment to help the Minister for Commerce and Industry out.

Mr R. C. H. Lim: Mr Speaker, Sir, this is one of the greatest social legislative measures ever passed in this House, a measure which is going to give members of the lower income group a chance to be shareholders of a company, and perhaps directors of a company. Imagine the pride of an ordinary clerk, a hawker, a trishaw rider holding shares and being a director of a company! Never has it happened before. Government is offering that opportunity. Sir, an amendment may be necessary to make sure that any trust would not be recognised. There may be no need for any penalty to be affixed, but the Government should refuse to recognise any trust. And any limited company has always provided that no trust will be recognised.

Mr Lee Kuan Yew: Sir, I do not want to start a legal debate with a gentleman who is expert in stabilising the worries of other people, but -

The Chairman: Order. I think perhaps we should avoid personalities.

Mr Lee Kuan Yew: Indeed, Sir, I was just trying to say, with humility, how reluctant I am to embark on a legal dissertation in this House. But to pass a law subsequent to this and say that all trusts shall henceforth be ignored, implies forfeiture of a man's beneficial interest, and that is penal legislation. It is as simple as that. If you say to a man who has acquired a beneficial interest in property that his beneficial interest will not be recognised, that is penal, because you are confiscating his property.

As for Mr R. C. H. Lim's point that all companies do not recognise trusts, that is true, for the purposes of their company's books. They do not care whether A's share is held in trust for B or C or D. They pay A or whoever has got the share scrip, and that is the end of the company's liability. But B, who is the beneficial owner can enforce his beneficial interest against A.

It is as simple as this. If I hold 50 shares, and one quiet day I am inveigled to sell them to the Hon. Minister for Commerce and Industry, and I sign a document to say that I hold them in trust for him, and then I go and collect the money, as far as the People's Investment Corporation are concerned, they have paid the shareholder. They are not interested. But if I refuse to pay the Hon. Minister for Commerce and Industry what I have acquired for him, because he is the beneficial owner, an action lies against me to hand over the proceeds. If the Attorney-General comes along and says that all that shall be illegal, that is penal legislation made retrospective because, at the time the poor Minister acquired the beneficial interest, it was not illegal to do so.

Mr J. M. Jumabhoy: Sir, I am rather lost in this. To my way of thinking, if a man goes and gets a thousand persons to become shareholders and agree to write that they have given him their shares as trustee, the dividend that the company pays out will still only be paid to the registered holders.

Mr Lee Kuan Yew: To whoever holds the share scrip.

Mr J. M. Jumabhoy: No. It is the normal company practice that, on a certain date before paying out the dividend, the transfer books are closed and then the dividend warrants are made out in the names of the registered shareholders. Now, if a person has gone and bought shares from 1,000 persons be cannot claim the dividend. The dividend will be paid to the registered shareholders, and these shareholders may refuse to give him the dividend, because he cannot then legally say, "I own these shares", since a person is prohibited from owning more than 50 shares. So that dividend will be paid only to the registered shareholders, who can then refuse to pay him. I do not think a man would then go and sue these one thousand persons for such small amounts like $200 or $300 each, that being the dividend. That is my interpretation. However, as I said, I will look into this question. I marvel at the ability of the Member for Tanjong Pagar to make a mountain out of a mole hill!

The other thing is the way he has described this new scheme. He says the scheme does not fall into any of the political thoughts-

Mr Lee Kuan Yew: Categories.

Mr J. M. Jumabhoy: Yes. I am sorry. I did not catch the word.

Mr Lee Kuan Yew: It does not fall into any category of socialist enterprise.

Mr J. M. Jumabhoy: That shows the narrow confines within which his political theories work. He cannot get away from the narrow confines of Marxism, "Thisism" or Thatism"! He cannot imagine new ideas or new schemes but he must perforce confine himself only to those that are thought out by others.

I do not know, Sir, whether an amendment is necessary, but I shall certainly look into the question. If an amendment is necessary, I shall then bring up an amending Bill to incorporate the amendment. At this stage, Sir, I do not think an amendment is necessary, because I think the fears expressed by the Member are just too imaginary. Possibly he has been able, by his command of English and his knowledge of law, to try to exaggerate those fears, so that the public reading the newspapers will open themselves to a future suggestion, "Ah, this is the way a capitalist government try to make the capitalists own this company."

Sir Ewen Fergusson: I want to make a point of clarification on the shares. It has been stated that a dividend cannot be paid to anybody else but the registered shareholder. But as I understand it any registered shareholder can give directions, "Please do this." I also do not see anywhere where it says no person can mortgage his shares. Surely there is nothing to stop him from borrowing money on the shares if he wants to.

Mr William Tan: Sir, I wish to draw the attention of the Minister for Commerce and Industry to the Schedule at page 3, clause 3 on the redemption of shares. It states there:

"The shares of the Corporation shall be redeemable at par at the office of the Corporation or at such other piece or places as may be decided by the Corporation:

Provided that where shares are presented for redemption payment for such shares may be made by the Corporation within three months of the date of presentation."

As we know, these shares will be sold to the lower income group, as Mr R. C. H. Lim has just said - the taxi-drivers, bus conductors and other working-class people. What I want to know is why must it take three months from the date of presentation before the investor can redeem his shares? A person in the lower income group may save a few hundred dollars and then buy shares from the Corporation; later he may suddenly find himself in urgent need of money. In such cases, provision should be made for this type of people to redeem their shares and get the money back. We must provide them with the facility to withdraw or redeem their money immediately without their having to wait for three months.

Mr J. M. Jumabhoy: The three-month clause is an enabling clause. It says a maximum of three months. It means that there is nothing to prevent the early repayment of the money in the case of a person redeeming his shares. But supposing there is a run on the Corporation, and all the money of the Corporation is invested, then this three-month clause will come into use, because that will give the Corporation time to get assistance from the Government to redeem these shares, since the Government is guaranteeing these shares and will have to pay up. Before Government can pay up this money, we have to get the Treasury to raise the funds and so on. Therefore, the three-month period will come in useful. But normally in simple and straight-forward cases, a man seeking redemption will get his money at once.

5.00 p.m.

Mr R. C. H. Lim: Mr Speaker, Sir, it is true to say that a company, on the proper authority from the shareholder, must pay the dividend to the person so authorised by the shareholder. But, Sir, in actual practice, as I have said before, can anyone imagine a millionaire of any type asking for an authority from a hawker that the dividend from his 50 shares be paid to him?

Mr Lee Kuan Yew: Why not? The Government-

The Chairman: Order. The hon. Member will have an opportunity to speak.

Mr R. C. H. Lim: However much we may dislike a person who has accumulated his wealth, we cannot underestimate his intelligence. Will a millionaire buy shares in the name of 1,000 nominees? Is it worth his while to go to the trouble of getting 1,000 persons and to give written authority to his nominees to collect the dividends on the shares? In actual practice this will never happen. In fact, from the very beginning, I have suggested a little amendment - "no holding on trust". But I have been convinced by the Minister that in actual practice this will not happen, and I think he is right.

Mr Lee Kuan Yew: May I inquire from the Minister whether he is against a man mortgaging shares or putting them on pledge and so on? All these intricacies must surely have been given their due consideration by his adroit mind.

Mr J. M. Jumabhoy: Mr Speaker, Sir, sometimes a man is in need of money. As these will be poor people, therefore, if a man is in need of money quickly, he can either come for redemption and get his money quickly, or, if there is a delay in redemption, then he can mortgage his shares and raise the money temporarily.

Mr Tan Siak Kew: Mr Speaker, Sir, Mr R. C. H. Lim has said that ordinarily nobody would be interested in investing money in 1,000 people holding 50 shares each. But the eventual danger really is when the Corporation succeeds and makes money like 100 per cent or 200 per cent profit. Then if the shareholder is allowed to mortgage his shares, he could be induced to borrow money from somebody with the shares as guarantee. There are ways whereby people will get interest. If a $500 share were to go up to, say, $2,000, you will find businessmen interested in offering the shareholder something like $1,000 as a loan - knowing that he is a registered owner of the shares - and then extracting, not the dividend itself, but the equivalent of the dividend as interest. There is the danger. If the Corporation is very successful, then the danger will arise.

Mr J. M. Jumabhoy: Sir, I do not consider that a danger. That is one time when the poor working man has his own back on the capitalist, and sells him something at a greatly enhanced price. Usually it is the reverse. Therefore, I will be very happy if a working man who owns a $10 share can sell it for $1,000.

Sir Ewen Fergusson: Mr Speaker, Sir, I would like the Hon. Minister to clarify the Schedule. "The shares of the Corporation shall be redeemable al par". Is this Corporation a revolving Corporation? Is there any power to re-issue shares after they have been redeemed? Is there such a thing as a re-issue?

There is also one other point. I wonder whether the Minister has thought of, Sir. The Corporation has many, many small shareholders. They are restricted to $500 each. Dividends are paid subject to the reduction of tax, like every other corporation. So if you pay five per cent in one year on $500-$25 less 40 per cent brings it down to $15. Everyone of these shareholders - let us say there are 20,000 - makes a claim or fills up an income tax form and claims a return of their income tax. I do not say it is a bad thing, but is it one of those things that should have been thought out when the Schedule was drawn up?

Mr J. M. Jumabhoy: Mr Speaker, Sir, if it were the intention that the shareholders should make five per cent profit, this Corporation would not have been floated. I gave the figure of $9 million on the cigarette industry as the possible profit accruing. If the factory requires $5 million capital, half of it will come to $2½ million. If the profit factor were only $2 million or $3 million on the $5 million capital, the percentage would probably come to 50 or 60 per cent profit. Therefore, the Singapore man would get between $200 and $300 on his $500 investment. That is my own working out of the possibilities, but the real possibilities will be worked out in the form of a prospectus. The answer to the other question raised, Sir, is in the affirmative.

Question put, and agreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

The Schedule-

Mr Lee Kuan Yew: Sir, since the Minister has already indicated his intention not to give heed to my application for leave to change the figure "50" to "10", or rather, despite his intention not to agree, I shall still ask you, Sir, to ask the House for their assent to change "50" to "10".

My reason in so moving is quite simply this. There is no difficulty in any one person owning anywhere between five and ten times the figure actually set down here. The average family - mother, father, five children, plus grandfather and grandmother - comes to nine. Nine times 50 shares will bring it up to 450 shares-

The Chairman: Order. I have allowed the Member to carry on up to now, but I think he ought to ask for leave first.

Mr Lee Kuan Yew: As you please, Mr Speaker, Sir. I ask for the assent of the House to move an amendment,

That the word "fifty" in clause 1 (1) of the Schedule be struck off and the word "ten" be inserted.

The Chairman: Hon. Members, of course, are aware that notice of an amendment of that nature ought to have been given, but the hon. Member is asking for assent under the provisions of Standing Order 23, which reads:

"Notice shall not be dispensed with in the case of a motion or in respect of any other proceeding for which notice is required except with the consent of the Speaker and the general assent of Members present."

I give my consent. Is it the pleasure of hon. Members that the motion be moved?

The Chief Minister (Tun Lim Yew Hock): May I crave your indulgence, Sir? You have given the hon. mover of that motion a chance to speak. I would like to be given a chance to explain why we cannot agree to give our assent.

The Chairman: I do not think the hon. Member went as far as that. I think the hon. Member spoke on the merits of his amendment, and that is all. If any Member on the Government Bench wishes to comment on that aspect, then assent should be given. The question will then be before the Assembly and then a debate could take place. But if no assent is given, then, of course, that is the end of the matter. I repeat my question. Is it the pleasure of hon. Members that assent should be given? Is it "Aye" or "No"? That is all I want.

Mr J. M. Jumabhoy: May I rise on a point of clarification?

The Chairman: Yes.

Mr J. M. Jumabhoy: Will you be calling each item on the Schedule? Will we again have the opportunity to speak on the Schedule?

The Chairman: Yes.

Mr J. M. Jumabhoy: In which case the clarification the Chief Minister now seeks could be given later.

The Chairman: But not, of course, as to the reasons why assent is not being given.

Mr J. M. Jumabhoy: No.

The Chief Minister: On a point of clarification. Is this assent to be given in regard to this number of shares?

The Chairman: Assent to the request by the hon. Member for Tanjong Pagar that he be given leave to move an amendment of which he has not given notice. And the amendment he has suggested is in page 2, line 33, to leave out "fifty" and there to insert "ten". All I need now is an "Aye" or a "No". Is it the pleasure of hon. Members that absent be given?

Some hon. Members: Aye.

Mr Lee Kuan Yew: Sir, I am obliged that, as a result of confusion amongst the S.P.A. Ministers,-

The Chairman: Order. It is getting rather late and I do not think we should indulge in any more personalities.

Mr Lee Kuan Yew: Indeed, Sir, I was anonymous in my reference. Nevertheless, the point that I was making was that in Singapore, where the size of an average family is anywhere between five and ten - father, mother, three to five children, grandfather, grandmother, uncles and aunts - there is no difficulty for any single person to own anything between five and ten times the statutory maximum number of shares. I have indicated earlier - and the Minister for Commerce and Industry agreed with me - that it is extremely unlikely that the average worker will have even $100 to invest and that the limit of $500 is the average investment potential of the middle class. Therefore, if we allow 50 shares to be the maximum, then in fact we are allowing the average man with a family of five to ten people to own 500 shares. Apart from the question whether Mr R. C. H. Lim thinks that it is a risk or it is not a risk to hold just a beneficial interest in shares - there is no risk whatsoever in any person holding them in his name or in the names of his wife, his five children, his aged father and his mother. He collects the dividends and it is his investment. Then, far from it just being a $500 investment, it becomes a $5,000 investment; or if the size of the family is sufficiently large, or there are sufficient numbers of faithful retainers in the family, it may well be 50 or 60 times the statutory maximum number of shares.

I therefore ask the House to join me in my amendment that "fifty" be changed to "ten".

The Chief Minister: Mr Speaker, Sir, on the Second Reading of this Bill, it was pointed out by the hon. mover of this amendment that the scheme would not be successful and that nothing would come out of it. In order to ensure that it will not be successful and that nothing will come out of it, he is doing all he can during the Committee stage to try and confuse the public of Singapore with regards to the intentions of the Government and the usefulness of the scheme which the Minister has embodied in his Bill. While it is true that no labouring class man would be in a position to own 50 shares all at once, it does not mean that he should be deprived of the opportunity to increase his holdings up to a maximum of 50 shares in due course of time. Again I say that this is another attempt on the part of the Opposition, particularly the P.A.P., to try to make it impossible for this scheme to go forward. If we reduced it to ten shares only, Sir, it would increase the work of the Corporation in seeking the $10 million required. If it is up to a maximum of fifty shares, the time factor and the number of people who would like to participate in the scheme would be considerably reduced. The Member said he did not think that it was a good scheme and it was a matter of opinion. Therefore, he would like to make it more difficult by limiting the number of shares for each person to ten shares!

We oppose the amendment, Sir.

Mr Lee Kuan Yew: Mr Speaker, Sir, do I understand from the Hon. the Chief Minister's reply that, in fact, he agrees with me that the average investment possible is five to ten times fifty shares? He has not given an answer to that. All that he is able to put forward in justification of keeping it at 50 shares is that perhaps a poor man can only buy one $10 share and that in the course of time, when he accumulates more capital, he can buy fifty shares. That is the most specious argument ever put forward in this House. If the Corporation is a success, all the shares will be snapped up. If it is a flop, the poor man will be wanting back his $10 which the Government had guaranteed at par. Never mind about motives and intentions! Let us meet arguments with arguments! My argument is that if you say 50 shares is the maximum, in effect, in the Asian society in Singapore, an average family man will be able to hold 500 shares. Every lawyer knows that no wealthy man holds properties in his name. He has properties in the names of all his various wives, girl friends, uncles, grand aunts, nephews and a whole retinue of camp followers. With this practice of five to ten members of an average man's family holding shares, the investment becomes anywhere from $5,000 to $15,000. In other words, far from weeping at the thought of the poor man who, for the first time in his life is given a chance to become a Director in case he gets elected by all his other poor fellowmen, it will be the usual ring of shareholders and share investors who will take the profit out of the Singapore Investment Corporation.

5.15 p.m.

Mr Lim Cher Kheng: Mr Speaker, Sir, I do not know whether I am making a mistake but just now I heard the Member for Tanjong Pagar say that he was only interested in facing an argument with an argument, and that the debate was not on motives and intentions. Sir, I think that is quite wrong. We are debating an important Bill. If the Member for Tanjong Pagar takes such an attitude towards this debate, he is merely wasting our time, Sir, I want to ask the Member for Tanjong Pagar this. What is the reason for his moving such an amendment? Why is it wrong for a family of 5, 10 or even 20 persons buying 50 shares each? It is not a matter of facing an argument with an argument, but it is one of principle. What is the intention of the hon. Member by bringing up this amendment? What is wrong for a big family wanting to buy 250 shares under different names?

Mr J. M. Jumabhoy: What is wrong is that the Member for Tanjong Pagar did not first think of the idea, and he does not want to acknowledge that this is a good move. I marvel, Sir, at him. If I ever need a lawyer, I promise that I will go and see him.

The Chairman: Order. I have stopped the Member for Tanjong Pagar from indulging in personalities, and the Minister is now embarking on personalities.

Mr J. M. Jumabhoy: I am sorry, Sir, It was not meant in any bad sense. At first, he tried to build it into something that is useless and which will come to nought. Now he tries to twist the angle, that he is the champion of the people fighting for the poor labourer against the imaginary bourgeois - the middle-class!

Sir, why is the $500 necessary? The $500 is the maximum enabling figure. It need not necessarily follow that every one must be given shares up to the value of $500. In normal company practice, when shares are floated, if the shares applied for are more than the number of shares to be floated, they are then allocated in proportion to the number of shares applied for. Sir, if the first floatation was for $2½ million or $3 million as a start for a cigarette factory venture, and instead, of 20,000 applicants there are 100,000 applicants, then those applying for 50 shares each will get ten shares each. It is up to the Corporation to allocate the shares. No person can say, "I have applied for 50 shares and therefore I must get 50 shares."

In reply to the Hon. the Chief Minister, the hon. Member said that if the Corporation was a success all the shares would be snapped up. That is not so. All the shares of each floatation will be snapped up. It is not intended to float all the $10 million at the same time, if the venture is a success, the Directors can call for its extension and this will mean finding more money. Then that is the time when new people can come into the venture, because all shares will rank pari passu - that is stated in the Schedule. The Directors could then say that the existing shareholders should not get the shares and that new applicants should get the new issue of shares. They could very well say that. It is up to the Minister, Sir, to direct if he wishes to do so, because there will be three appointed Directors and the Chairman will be appointed by the Minister.

Sir Ewen Fergusson: On a point of clarification, Sir.

The Chairman: If the Minister will give way.

Mr J. M. Jumabhoy resumed his seat.

Sir Ewen Fergusson: Sir, is the Minister accepting responsibility for issuing the shares when he says that the Directors may not issue what a particular person applies for, and may not even issue them to one particular person?

Mr J. M. Jumabhoy: Mr Speaker, Sir, it is not a question of the Minister being responsible for the issue of shares. The Minister can give a directive on all the things that come within his portfolio. For instance, I can give a general directive - I think the Governor in Council can - to the Industrial Promotion Board, and so on. In fact, this is not a matter where a Minister will say, "I exercise this by my authority." It is a matter of general directive for the public good. That is all.

Mr Lee Kuan Yew: Sir, let me wind up the argument on principle. We are not just arguing for the sake of argument. The argument is based on the principle of this Bill. This Bill will come to nought. The Government is insisting on going through with it. I am now holding the Government to the principle it has enunciated as the raison d'etre of this Bill. The raison d'etre, I understood from the Minister for Commerce and Industry, is not to help the share-owning class to own more shares in a guaranteed profitable concern, but to help the usually non-share-owning class - the poor workers - who have not got $500 to invest anyway, to get them firstly, to save money; secondly, to invest the money on industry; and, thirdly, to provide them with good profits. I am saying that if you want to achieve that, then that principle is not being achieved when you limit the maximum to 50 times $10, which is $500 per person. As I have explained - and nobody had the audacity to refute it - there is no difficulty in Singapore to multiply that by five to ten. If the Government sincerely believes that the purpose is to help the non-share-owning public to own shares, then the maximum ownership of the number of shares should be reduced. If, in fact, that is not the scheme but it is, in the words of the Minister for Commerce and Industry, "only a political stunt", then so be it.

The Chief Minister: Mr Speaker, Sir, I heard the hon. Member say that no one had the audacity to refute the reason for his amendment. It would mean, Sir, that if any one had the courage to stand up to refute any reason of his, it is audacity. What cheek and what impertinence!

The Chairman: Order. It pains me to have to pull up the Chief Minister on a point of order of that nature. I am sure that he did know, before he used those words, that they are completely unparliamentary and I ask him to withdraw those words.

The Chief Minister: I beg to withdraw both those words. Well, it may be better to leave things unsaid! One can see how I feel. If anyone says anything to refute the reasons put forward by the hon. Member, it is audacity. Sir, I am not audacious at all. I have never been and I hope I will never be. But I say that the Government is introducing this measure in order to bring in the working class to participate in a cigarette factory. That has been mentioned. The Opposition, particularly the P.A.P., says that it cannot be done. All right, they are entitled to their view. We say that it can be done and we are doing all we can to prove that we are right. We do not feel that we need any assistance from them to try to carry out what we think is right.

Amendment negatived.

Mr J. M. Jumabhoy: Sir, I move,

In page 4, line 22, to leave out "nominated" and insert "appointed".

This is a drafting amendment to bring it in line with the language used in other parts of the Schedule.

Amendment agreed to.

The Schedule, as amended, ordered to stand part of the Bill.

Bill reported with an Amendment; read the Third time and passed.