CUSTOMS BILL

Order for Second Reading read.

5.34 p.m.

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I have His Excellency the Yang di-Pertuan Negara's recommendation to proceed with the Bill. I beg to move, "That the Bill be now read a Second time."

Sir, I should perhaps explain why Government considers it necessary to take the Bill through all the three stages today. The House will be aware that, with effect from today, the Government has imposed protective duties on the import of washing soap. At the same time, the Government has liberalised the imports of washing soap. Previously the imports of washing soap were placed under special licensing.

On the 29th October, 1959, the report of the Committee to consider the imposition of duties on the imports of hard soap and detergents was presented to the Assembly. The Committee recommended the imposition of import duty on washing soap as a measure to protect the local industry. It was not possible, for reasons which I shall explain later, to introduce such duties forthwith. Accordingly it was decided to place the import of washing soap on special licence with quota ceilings based on previous performance. Now this action could be justified under the General Agreement on Tariffs and Trade only as a temporary measure. It was necessary to regulate soap imports principally to prevent speculative hoarding of a commodity on which an import duty was expected to be imposed. Certain amendments have to be made to existing legislation before proper administration of the duty could be enforced. At the same time, the Customs Ordinance was due for a general overhaul, and it was thought that this new amendment should go into the general revision of the Ordinance. Thus what was intended as a short-term temporary expedient turned out to have a longer life than was originally anticipated.

Before the introduction of these duties, Government was faced with two alternative courses of action regarding the mechanics and timing of this Bill. The first alternative was to wait until the new Bill was introduced, and to impose a duty under the powers derived there-from. It would still have been necessary to take the Bill through all three stages at once because of the complaints that the Government's regulation of the import of washing soap was contrary to the General Agreement on Tariffs and Trade to which we are bound. It was felt that under these circumstances to take the Bill through all three stages without at the same time giving the House sufficient reason therefore would be unreasonable. However, because the interval between the passing of the Bill and its coming into force would take several days, to give reasons justifying such action may lead to the hoarding and rapid increase in the price of imported washing soap. The second alternative which the Government has chosen is to impose a duty under powers derived from the existing Ordinance and then introduce a new Bill in order that the implementation of these duties may be made easier.

Now why is this so? Under the existing Ordinance, the Comptroller has no power as such to decide whether a commodity is dutiable or not until an order has been made under section 11 of the Ordinance, although such powers are implied, for example, in section 42 and section 73 (1) . By contrast, clause 23 of the Bill specifically provides that the Comptroller has the power to decide. This is of particular importance in the case of soap, because, at present there is an import duty only on washing soap and not on toilet soap or synthetic detergents.

Again, the existing Ordinance does not provide for duty drawback except on tobacco. Thus, if an importer imports washing soap, pays duty thereon and subsequently re-exports such soap, the law does not provide for duty drawback. Clause 69 of the Bill provides for the possibility of duty drawback under conditions in which the goods are identifiable.

Clause 20 of the Bill also amplifies the definition of "value" for Customs purposes. At present the duty on soap is a specific duty, and, therefore, the need for this amplification does not arise. But in future it is conceivable that some duties would be fixed on an ad-valorem basis. For this reason, it is necessary to have a clearer definition of "value" for Customs purposes. The present rather limited definition of "value" is contained in section 3 of the Ordinance.

The Bill also provides for additional powers, including -

the power for the Minister to appoint all members of the Liquors Licensing Board which is to replace the present Board of Licensing Justices of which three members are at present elected by the Justices of the Peace from among their number; the power for the Comptroller to determine whether any goods come under the dutiable or prohibited categories presented to the Minister's order, so that possible delays due to the necessity of frequent references to the Minister may be avoided;

the power for senior Customs officers to issue search warrants and to conduct searches. This will replace the present practice of appointing Customs officers to be Justices of the Peace as and when they require such power. This practice is administratively undesirable.

And then there is the power for proper officers of customs to determine the proportion of goods which are to be opened and examined and tested, and to remove the confusion regarding the interpretation of a 10 per centum tax as is required at present.

Other major amendments include the transfer of the responsibility for the collection of a special tax on heavy oil engined vehicles from the Comptroller of Customs to the Registrar of Vehicles to facilitate the payment of tax by the owners of such vehicles, and the reduction of the amounts of drawback duty paid on tobacco allowed to the manufacturer from the whole of the duty paid to seven-eights of the duty paid to allow for the recovery of administrative cost.

Sir, I beg to move.

Question proposed.

5.42 p.m.

Mr Rajah: Mr Speaker, Sir, this is a consolidating Bill of the Customs Ordinance (Chapter 160) and all other subsequent Ordinances which have amended Chapter 160 of our laws. While consolidating the Ordinances, the Government has availed itself of the opportunity to introduce new clauses which, in its view, help to clarify the Customs Ordinance or to give to the Comptroller of Customs certain definite added powers which would enable him to administer the Customs Ordinance more effectively.

Mr Speaker, Sir, on a number of occasions I have spoken in this Assembly against the increasing practice of the Government to introduce Bills on Certificates of Urgency. In this instance, the Opposition is obliged to the Government for having sent this Bill two days earlier. On other occasions we were faced with Bills being laid on the Table when we got here. I am glad that the Minister for Finance in his Second Reading speech, has explained why it has been necessary to take this Bill through all three stages today.

Mr Speaker, Sir, my own view is that no consolidating Bill, with certain amendments put into it because the Government wants to avail itself of the opportunity to tidy up the Bill, should be put through in this Assembly, or any other Assembly for that matter, in one day.

The Minister says that if this Bill had not been taken through all its three readings today, the Government might have been faced with the possibility of hoarding in soaps which have now come under taxation and, therefore, that would lead to loss of revenue. With great respect to the Minister, I beg to differ. I think the Comptroller has sufficient powers under the existing Ordinance to declare soap of the kind which has been declared dutiable today as dutiable, and to see that duty thereon is collected as from today. The proposed Bill will not give the Government any further powers in that matter.

Sir, I take it that it is under section 11 (2) of the existing Ordinance that this new declaration that duty is payable on soap has been gazetted. The clause in the new Bill is identically the same. It has given the Government no greater powers. The question of hoarding only arises when people know that the Government is going to bring in a particular category of goods on the taxation list. Then they rush to hoard those goods before the Government puts them on its taxation list. In this case, Mr Speaker, Sir, the Government has the power to put any article which it so wishes under section 11 (2) of the existing Ordinance. Therefore, I submit, with great respect to the Minister, that. it was completely unnecessary to move this Bill through all its three stages today merely to defeat the hoarders. Sir, I agree that substantially the Bill is exactly the same as the Customs Ordinance as it now is. But there are a number of new additions on which I feel I am not competent to speak because they are matters which affect the trading community and the system of carrying on a business or a trade. I would have felt happier if this Assembly could have been able to pass it after all responsible views with regard to trading and mercantile matters had been consulted and given effect to. I understand, Mr Speaker, that there is a Trade Advisory Council. I wonder whether the new amendments have been put to the Trade Advisory Council and what their views are on the amendments put to them. I believe such a Council exists. If I remember rightly, the Government has said that in all matters affecting trade and business interests, this Council would be consulted before any legislation is put through.

There is one other point on which I wish to touch in this speech, Mr Speaker, Sir, but I will elaborate on that point in the Committee stage. In respect of this point I have filed an amendment, a copy of which I have already given to the Minister for Finance. As I see it, Mr Speaker, there are at the moment only two classes of goods which are liable to taxation under the existing Ordinance. Section 11 (1) reads:

`There shall be charged, levied and paid such duties on intoxicating liquor, tobacco and petroleum imported into or manufactured in the Colony as may be prescribed from time to time by the Yang di-Pertuan Negara by order published in the Gazette.'.

So that we get under subsection (1), Mr Speaker, the goods, "intoxicating liquor, tobacco and petroleum imported into or manufactured in the Colony". These three types of goods are taxable. Then under subsection (2) is another class of goods. The subsection reads:

`Where, on consideration of the report of a committee of not less than three persons appointed for the purpose by the Minister, by notification in the Gazette, in respect of any goods specified in that notification, it appears to the Yang di-Pertuan Negara that, having regard to the need for protecting any industry which is established or is about to be established for the manufacture of any goods in the Colony...'.

Then to protect those interests the Government can list certain goods in a Gazette notification. It is under that subsection (2) that the Government has this morning listed soap as dutiable.

Mr Speaker, Sir, I will try to convince the Minister that, although he says that this is a consolidating Bill, it does not take the powers of the Government any further than it has today. I will try to convince him that under the proposed clause 11 (1) , the Government has brought in yet another category, perhaps unintentionally. But I will not elaborate on that at the moment, Mr Speaker. I will do so when we are in Committee. Other than that, Mr Speaker, I have nothing to say about this Bill. This is substantially a consolidating Bill, as the Minister has said, except perhaps for this over-sight and for certain matters to which, if he has consulted trading interests and if they have agreed, we will certainly have no objection.

5.52 p.m.

Mr Thio Chan Bee (Tanglin): Mr Speaker, Sir, it seems to me that this very important Bill marks a major change in the economic policy of the State of Singapore. I may be wrong, Sir, but it looks as if this Bill will mean that the Government is beginning to shift, shall we hope gradually, from a policy of free trade to that of protective tariffs. Sir, we are at one with the Government in wanting to encourage industrialisation in Singapore. But if in the process of encouraging industrialisation it is in such a hurry that it spoils the entrepot trade before we are ready to have enough industries, then the results may not be as advantageous as we have expected and may even be injurious. We know, Sir, that even among the traders the question of protection and free trade has aroused a great deal of controversy. From the consumers' point of view, of course, nobody wants to pay more for an imported product on which increased duties have been imposed, or for a local product which may be inferior in quality. I would suggest, Sir, that with the implementation of this new policy great care should be taken that we do not cause more unemployment, because if due to imposition of new duties we put out of employment a certain number of people and industries created or protected are not able to give employment to more people, then in the long run we shall have a bigger unemployment problem.

Sir, in view of .the controversial nature of this new policy of increased protection, we on this side of the House think that an important Bill like this should not be rushed through on a Certificate of Urgency. In the past, whenever very important Bills had to be passed, the public were given a chance to study the clauses of the Bills so that if they thought the clauses should be amended, they would have the chance at least to put forward their views to the Government. But as it is, of course, we have just got to accept a fait accompli. We hope, Sir, that this procedure of getting Bills through on Certificates of Urgency will not become the normal procedure in this House, because thereby we defeat the very purpose of having an Assembly. Sir, although the Government will be able to push through this Bill, we hope that in the implementation thereof great care should be taken so that where increased duties are suggested which may be of a controversial nature, they should go slow on it. It is no use giving up a bird in the hand in the hope of getting two birds in the bush, if we cause unemployment among those who depend on the entrepot trade in the hope of giving employment to those to be employed in factories.

Mr Speaker: Dr Goh, in reply?

Dr Goh Keng Swee: Mr Speaker, Sir, I shall first deal with the comments of the Member for Tanglin because I think he is labouring under a complete misconception of what this Bill is about, it will not take me long to correct this misconception.

The hon. Member is under the impression that this Bill introduces a major change in the economic policy of the Government of Singapore. Further, he seems to labour under the impression that the act itself of passing the Bill would introduce new taxes. I do not think he has been very diligent in his homework, because it would have been very obvious from the explanatory notes that this Bill does not in itself introduce any new duties. For the most part, it consolidates the existing Customs Ordinance, but it allows a certain modification of the administrative procedures so that new duties as and when they are imposed by the Government could be effectively administered.

As regards the new duties that would be imposed under clause 11 (2) of the Bill, the one immediately before the State, of course, is that on soap. I have referred to the Report of the Tariff Advisory Committee on Soap. And it is this procedure that will be followed by the Government before any new import duty is imposed. That is to say, a Committee will be set up under clause 11; the public will have an opportunity to make representations to the Committee either in favour of or against any new import duty. That was the procedure we adopted before we decided upon the imposition of duties on washing soap. So much for the hon. Member's misgivings. Indeed they are all based on a complete misunderstanding of the purpose of this Bill.

Now, to reply to the Member for Farrer Park. He was in some doubt as to whether it was really necessary to pass the Bill through all stages today. He quite rightly pointed out that there could be very little fear from the point of view of loss of revenue. We are not so much worried about the loss of revenue because the import of washing soap is already regulated, and it is not possible for any importer today to import greater quantities than his quota. What we are concerned with are the repercussions that this Bill could have on the market for soap. There would be some uncertainty as to the amount of duty and the timing of the imposition of the duty. By and large, this would have a disturbing and upsetting effect on the market for soap. Therefore, in order to avoid any possibility of this, we decided to act quickly and carry it through - the two operations of imposing the duty and passing this Bill today.

The Member for Farrer Park has stated that, in his opinion, the existing Ordinance is quite adequate. It is adequate for the imposition of duties on washing soap, but it is not adequate for the effective administration, because when you come to particular commodities, there may be doubt as to whether a particular brand of soap is to be considered washing soap, or toilet soap, or any other form of soap. In this Bill, clause 32 (2) gives the Comptroller power to make a decision on the subject so that the administration of revenue collection will not be bogged down.

As regards the need to refer to mercantile interests, I have already explained, in my remarks on the views of the Member for Tanglin, that commercial interests have adequate opportunity to make their views known to the Tariff Advisory Committee on Soap. As regards the general provisions of this Bill, they concern largely the administration of this Bill. There is nothing controversial at all about these provisions because they are, by and large, adopted from the corresponding Ordinance which has already been in operation in the Federation of Malaya for a long time.

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. - [Dr Goh Keng Swee].

Bill considered in Committee.

[Mr SPEAKER in the Chair]

6.05 p.m.

Clauses 1 to 10 inclusive ordered to stand part of the Bill.

Clause 11 -

Mr Rajah: Sir, I have drafted an amendment and have handed it to the Clerk of the Legislative Assembly. I believe he has made copies of it. May I therefore, Mr Speaker, Sir, formally move,

In page 8, lines 8 and 9, to leave out "any goods made dutiable on import or manufacture and", and there to insert "imported into or manufactured in Singapore and on".

The Chairman: Perhaps the Member would like to consider this a little further. I think what he really wishes to do is perhaps to reinstate more or less the wording of the original subsection of the Ordinance, which reads:

`(1) There shall be charged, levied and paid such duties on intoxicating liquor, tobacco and petroleum imported into or manufactured...'.

So that, if the Member would agree, the words to leave out would be -

`petroleum, any goods made dutiable on import or manufacture and'

and insert -

`and petroleum imported into or manufactured in Singapore and on.'

That would then bring in all the words of his amendment.

Mr Rajah: I am obliged to you, Sir. The purpose of this amendment is merely to bring the proposed clause into line with what I consider are the provisions of the existing law. The provisions of the existing law, Mr Speaker, Sir, are in section 11 of the Ordinance -

`(1) There shall be charged, levied and paid such duties on intoxicating liquor, tobacco and petroleum imported into or manufactured in the Colony as may be prescribed from time to time by the Yang di-Pertuan Negara by order published in the Gazette.'

That, Mr Speaker, Sir, is the first category of goods in respect of which duty may be charged. And it is the law itself which says that, intoxicating liquor, tobacco and petroleum shall be chargeable with duty. And the quantum of duty is also provided for in that section. Subsection (2) of section 11 of the Ordinance, Mr Speaker, Sir, provides that -

`Where a committee of not less than three persons appointed for the purpose by the Minister...'

have made certain recommendations which have been forwarded to the Yang di-Pertuan Negara, and if on perusal of that document it appears to him that -

`having regard to the need for protecting any industry which is established or is about to be established for the manufacture of any goods in the Colony and to the interests of the entrepot trade of the Colony in respect of such goods, it is expedient to impose duties on the import of such goods, he may by order published in the Gazette prescribe the duties to be levied and paid on such goods imported into the Colony and such duties shall thereupon be charged, levied and paid:

Provided that no duties shall be charged or levied under this subsection on any textiles imported into the Colony.'

So that in addition, Mr Speaker, Sir, to the first category set out in subsection (1), subsection (2) sets out that the Yang di-Pertuan Negara may go beyond intoxicating liquor, tobacco and petroleum. Therefore, the goods in respect of which the Yang di-Pertuan Negara may go over and above subsection (1), Mr Speaker, Sir, are goods in respect of which a report has been submitted to him by a committee of three. Now, if the Minister accepts that position, and if that is the correct expose of the present position, let us now therefore look at the present proposed new clause. The proposed new clause, as I read it, Mr Speaker, Sir, seems to set out three categories:

`(1) There shall be charged, levied and paid to the Comptroller such customs duties on intoxicating liquor, tobacco, petroleum,'

that is the first category, Mr Speaker. Sir, as set out in subsection (1) of the existing law. Then -

`any goods made dutiable on import or manufacture'.

This, in my view, Mr Speaker, Sir, is the second category which is not provided for in the xisting law. And then, the third category -

`and any goods made dutiable by an order under subsection (2) of this section which are imported into or manufactured in Singapore, as may be prescribed by the Yang di-Pertuan Negara by order published in the Gazette.'

This third category here, Mr Speaker, is the second category provided for under subsection (2) of the existing Ordinance. So that if this clause as it stands becomes law, we will get the position where the Government can impose duty on intoxicating liquor, tobacco and petroleum by virtue of sub-clause (1). And Government can also impose duty on any goods made dutiable on import or manufacture, and such goods need not be goods which come under sub-clause (2). So we get to the position where we have three categories of goods - intoxicating liquor, tobacco and petroleum; any goods made dutiable on import or manufacture; and any goods made dutiable under sub-clause (2). But we could quite easily delete the whole of the clause and say -

`There shall be charged, levied and paid to the Comptroller such customs duties on any goods as may be prescribed by the Yang di-Pertuan Negara by order published in the Gazette.';

because the greater must include the, less. "Any goods made dutiable on import or manufacture" is the greater. Therefore, it must include the less, in respect of which a report has been submitted to the Yang di-Pertuan Negara.

If the Minister is with me up to now, then I think he will agree with me, Sir, because he has said in his reply on the Second Reading that the intention of the Government, is not to impose duty on goods in respect of which the public have not been allowed the opportunity to make their representations. Subject to what the Minister has to say. Mr Speaker, I think the intention was not to extend this new Bill beyond the ambit of the existing law. Perhaps this has been wrong drafting, and I will therefore let the Minister speak on that for the moment.

Dr Goh Keng Swee: In regard to the imposition of new duties, it is as I have said in my Second Reading speech. And in view of the comments made by the Member for Farrer Park, I will accept the amendment if it is as amended by you, Sir.

6.15 p.m.

Mr Thio Chan Bee rose -

The Chairman: Does the Member wish to speak on the amendment?

Mr Thio Chan Bee: Yes. Mr Speaker. Sir, I was regarded as having misapprehended the Bill because of what I said. But I was apprehensive about this particular clause because in the Explanatory Statement it is stated that the power to levy customs duty has been extended to include all goods. I am glad indeed that the Minister for Finance has accepted the amendment proposed by the Member for Farrer Park.

Amendment agreed to.

Clause 11, as amended, ordered to stand part of the Bill.

The Chairman: I propose to take clauses 12 to 22 inclusive, unless there is any Member who wishes to speak on any particular clause in between. Before I do that. I wonder if the Minister for Finance will be able to indicate any consequential amendments which may have to be made in view of the amendment to clause 11. When I come to clause 23, I will point that out. Clause 22, I think, is all right.

Clauses 12 to 22 inclusive ordered to stand part of the Bill.

Clause 23 -

The Chairman: Perhaps the Minister would like to look at this clause to see whether there should be an amendment. I am just wondering whether in line 33 the words `under subsection (1) or' ought to be deleted.

Mr Rajah: May I say something on that, Sir?

The Chairman: Yes.

Mr Rajah: I had considered the possibility of the ramifications of one amendment, and I did think, in the first instance, that possibly clause 22 and clause 23 should be amended. But on further reflection, I found that it was not necessary because it is under sub-clause (1) of clause 11 that intoxicating liquor, tobacco and petroleum come. You have two types of goods on which duty may be levied, tinder sub-clause (1) of clause 11, it would be liquor, tobacco and petroleum: and under sub-clause (2) of the same clause it would be in respect of matters on which there is a recommendation by a three-man committee. You still have the two categories - one category leviable under sub-clause (1) and the other under sub-clause (2). Possibly because of that, Sir, I did not suggest that clause 22 and clause 23 should be amended.

The Chairman: I am just trying to indicate to the Minister that perhaps in so far as clause 22 is concerned, it is all right because this cause concerns custom duty; whereas clause 23 deals with the question of goods deemed to be dutiable, and that is different. Clause 23 reads:

`If any question arises as to whether any particular goods are or are not included in a class of goods appearing in an order made under subsection (I) or under subsection (2) of section ii of the Ordinance, such question shall be decided by the Comptroller.'

In view of the amendment to clause 11, there does not seem to be any order of that nature which could be made under subsection (1) . Perhaps I might also draw attention to cause 32 along the same line of thought. Clause 32, sub-clause (2) now reads:

`If any question arises as to whether any particular goods are or are not included in a class of goods appearing in an order made under subsection (1) of this section, such question shall be decided by the Comptroller.'

Dr Goh Keng Swee: I speak subject to correction by such legal illuminati that may be in the House today. It looks to me that it would be an order made under subsection (1), and that would relate not to the class of goods but to the rate of duty that would be 1.eviable on liquor, tobacco and petroleum. So an order would be necessary to give effect to subsection (1). Clause 23 gives the power to decide whether any particular goods would come under the classes of intoxicating liquor, tobacco and petroleum.

The Chairman: If the Minister is satisfied, I will put the Question on clause 23 then.

Clause 23 ordered to stand part of the Bill.

Clauses 24 to 31 inclusive ordered to stand part of the Bill.

Clause 32 -

The Chairman: Clause 32. Of course the Minister will consider sub-clause (2) to see whether he is satisfied. To fall in line with clause 23, ought not the words or under subsection (2)' be added after subsection (1)'?

Dr Goh Keng Swee: `Subsection (1)' here refers to subsection (1) of section 32 and not subsection (1) of section 23. I misled the House when I quoted this section.

The Chairman: I see.

Clause 32 ordered to stand part of the Bill.

Clauses 33 to 125 inclusive ordered to stand part of the Bill.

6.30 p.m.

Bill reported with an amendment: read a Third time and passed.