RUBBER DEALERS (AMENDMENT) BILL

[Mr SPEAKER in the Chair]

Order for Second Reading read.

The Parliamentary Secretary to the Minister for Finance (Mr S. Ramaswamy): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

This Bill seeks to amend section 2 of the Rubber Dealers Ordinance by providing a definition of the word "purchase" with the intention of removing uncertainty prevailing in the rubber market as to the validity of rubber contracts. This uncertainty arose from the decision of the Court of Appeal in the case of Mizrahie versus Stanton Nelson. In this case, one of the two grounds on which the appellant based his appeal was that as he did not hold a licence under the Rubber Dealers Ordinance to purchase rubber, the forward rubber contracts which the plaintiffs as rubber brokers entered into on his behalf with third parties were illegal and void.

Although the Court expressed no opinion as to whether the contracts were null and void because the appellant did not hold a licence under the Rubber Dealers Ordinance, sufficient doubt and uncertainty have been created which affect confidence in the Singapore rubber market.

As it stands, it is not clear whether the word "purchase" appearing in section 2 of the Ordinance refers to all purchases or only to such purchases completed by delivery.

The proposed definition makes it clear that only purchases of specific rubber completed by delivery will need to be covered by a licence and that forward contracts for the purchase of unascertained rubber by description do not require a licence on the part of the purchaser. It is understood that corresponding amending legislation is being considered in the Federation of Malaya.

Sir, I beg to move.

Question proposed.

Mr David Marshall: Mr Speaker, Sir, I do not know how many Members of this House are really conscious of the radical principle involved in this Bill. Mr Speaker, there are in Singapore business firms who indulge in the purchase of forward rubber for legitimate means for satisfying the requirements of purchasers in the United Kingdom, U.S.A., and elsewhere. It is a perfectly healthy business and vital for our economy. There are others who use this as the grand gambling game. Mr Speaker, by putting a small deposit you can purchase forward rubber three months forward, and during those three months hope to make a fortune if it rises by one cent - I think you are supposed to make more than $1,000 on a 25-ton contract, and so on it goes. I am not speaking in vacuo, Mr Speaker. I know of actual cases where even housewives who do not know a bale of RSS.1 from a tin of rubbish, purchase forward contracts at the instigation of rubber brokers seeking to get their commission, being promised an El Dorado of wealth.

Mr Speaker, this Bill seeks to legalise large-scale gambling. I would like to put it a little differently, Mr Speaker. If there is a legitimate business in dealings in rubber, every firm can easily take out a licence and pay for it. There is no difficulty at all there. It is a question of a formal application for the purchase of a licence, and its annual fee is a very moderate sum. Even big firms may wish to indulge in gambling - if they want to, it is their own affair. But I do urge this House and I do plead with this House not to open the door to large-scale gambling for small people as this Bill would. It has been proved in the past. Sir, the rubber brokers cannot really be blamed very much. They are there to make profits, and if they can persuade you to buy rubber even if they know you are going to lose - they hope you will make - they get their commission. It is a question of the effect on the ordinary citizen. There are many of them who had been involved in this grand gamble and who have had their fingers burnt and who have not had the money to go to court like Mizrahie had and fought it to the end. Those people were cornered and pauperised. Let us recognize that the rubber brokers have very little mercy when it is a question of owing the money on these contracts. They seek not to extort but to compel payment of what is their lawful due. But I say with respect, Mr Speaker, that this Government, which calls itself socialist, that all of us, who have any respect for the principle that we should seek to protect the common man from an unhappy propensity, to gambling in so far as it is legitimate, instead of bringing up this Bill, we should instead make it definite that all unascertained rubber by description is included in the word "purchase" and is not excluded. That is what we should do in order to protect the small man from an organised business which seeks to make a profit out of its commission. Also at times let us remember that brokers, jobbers themselves, in their own names or through the facade of their friends, purchase rubber in the hope of its going up or sell rubber in the hope of its going down; and then when they are caught they seek to unload on the unsuspecting victim.

Sir, I do not know if the Government is really conscious of what it was doing in this matter, or whether it was merely seeking to please its friends and did not understand the extent of the dangers which it seeks to unleash upon the people. But I do plead with the Government to reconsider this Bill, a Bill which authorises gaming on a tragic and ruinous scale.

Dr Goh Keng Swee: Mr Speaker, Sir, the Member for Anson may have a good case if only he will put it in proper perspective and refrain from grossly exaggerating or distorting the picture. Now, of course, there is gambling in the rubber market. There is gambling in any extensive producing market. There may be isolated cases of private individuals who gamble in the rubber market. They may gamble in the stock market. They may gamble in any other markets or indulge in various forms of gambling. Is it seriously suggested that just to protect a small number of foolish people - I do not agree with the Member for Anson that this is an extensive social menace - in order to prevent a few foolish people from getting their fingers burnt in transactions of which they have no understanding, we are to put the rubber market in a straitjacket? That is what it amounts to, because the real difficulty is how you are to distinguish the small operator from the big operator, the business operator from the non-business operator. One certain criterion is set out. Once you have a Government board that controls transactions, then I say the functioning of the rubber market, if not reduced to a standstill, will certainly cease and be crippled. The volume of operations in the rubber market is tremendous. This is the largest rubber market in the world. By and large, transactions conform to certain standards of commercial ethics, and the volume of downright gambling undertaken by ignorant people is simply marginal. But to say that this Bill unleashes on the people a new danger, and at the same time say that this has been happening all the time is surely inconsistent. If we unleash a new danger, it means that housewives may enter the rubber market, and by introducing this Bill we are inviting housewives to do so. I do not agree that the remedies proposed by the Member for Anson meet the case. The purpose is quite simple. It is to ensure that contracts in forward purchases, dealings in what is called paper rubber can be enforced legally, and, indeed, if such were to be the case, then perhaps there would be less temptation on the part of people not familiar with the workings of the rubber market to try their luck there.

Now the problem posed to the Government as a result of the decision of the court case, although simple in principle, involves quite a number of intricate issues; and one of the reasons why the Government has taken such a long time before it presents this Bill to the House is that we have carried out consultations not only with the rubber trade in Singapore but also with our opposite numbers in the Government of the Federation. The solution that they have arrived at after long months of deliberation are the two Bills which are now before the House. As I have said, their purpose is to ensure that transactions in the largest rubber market in the world have a proper legal standing.

5.50 p.m.

Mr Speaker: Mr Ramaswamy, in reply?

Mr Ramaswamy: Mr Speaker, Sir, the Member for Anson says that common people and housewives all deal in rubber contracts. I beg to differ from his view. Only people who know the rubber trade deal in these contracts. Maybe there are a few foolish people who venture into this kind of business. I would like to tell the House that the Federation of Malaya has also passed similar legislation which will come into force very soon.

Another point is that these two Bills - this one as well as the Civil Law (Amendment) Bill which I have just moved - only enable legitimate hedging operations to be carried out without fear that such contracts would be declared void. Reckless and undue speculation would be curbed as the relevant contracts become enforceable and no defence can be brought on the grounds that such contracts are gaming contracts. Therefore, the Bill protects genuine rubber dealers who deal in forward contracts.

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 Ramaswamy].

Bill considered in Committee.

[Mr SPEAKER in the Chair]

5.55 p.m.

Clause 1-

The Chairman: In page 1, line 5, to leave out "1961" and insert "1962". That will be done.

Clause 1, as amended, ordered to stand part of the Bill.

Clause 2 -

Question proposed, "That clause 2 stand part of the Bill."

Mr David Marshall: Mr Speaker, the Minister for Finance has indicated that rubber purchase and sale in this territory is vital for our economy, and quite rightly, as it is one of the largest centres of the rubber trade in the world. I am glad to hear it. The question is, what difficulty will there be on the part of a legitimate rubber dealer in taking out a licence? None at all. That the Minister has not answered. If you make it necessary for a person to take out a licence before there can be any sale of rubber to him or any sale of rubber by him, it would be deemed to be enforceable; then you would protect the common man from being made the victim of the rubber broker. I am not seeking to limit in any way the rubber trade. All I am seeking to do is to limit the rubber trade to legitimate traders. Let them gamble if they will.

The Parliamentary Secretary completely misunderstands the Bill, if I may say so with respect. It does not protect anyone from gambling losses. It does not only protect legitimate hedging of purchase and sale, but it also protects all gambling transactions as well as legitimate transactions. And it is Unnecessary. All I ask this Government to consider is that it should leave it at the position where a licence is required before you indulge in the purchase and sale of rubber. The Minister has said, "How can you exaggerate so much as to say that we are opening the floodgates of a grave danger when you say it has existed already?" Again he mis-understands me, Mr Speaker. The Mizrahie decision in the court of appeal is of a character which has considerably lessened this activity. Now we are going to wipe out the Mizrahie judgment. The floodgates are there. The poor man, the simple man who is going to be told, "You are earning $200 or $300 as a teacher. Come, give me your life savings of $5,000, and in five days I will give you $50,000." Maybe you can make $50,000. But, on the other hand, the probability is that you will lose it. And there is no protection. But if the same teacher were to be told, "Take out a licence first. Become a rubber dealer," he would think twice. All I am asking the Government to do is to leave the protection of the Mizrahie judgment for the commoner, by making it necessary for dealers in rubber to have licences. I do urge the Government to see the justice of that request.

6.00 p.m.

Question put, "That clause 2 stand part of the Bill."

Mr David Marshall: Division. Sir.

The Committee divided: Ayes, 23; Noes, 23; Abstention, Nil; Absent, 3; Paired, 2. Ayes. Noes. Ahmad bin Abdul Hamid bin Ibrahim. Haji Jumat. Buang Bin Omar Ahmad Jabri bin Junid. Mohammad Akib. Byrne, K. M. Bani, S. T. Chan Chee Seng. Chan Sun Wing. Chor Yeok Eng. Fung Yin Ching, Goh Chew Chua. Miss. Goh Keng Swee. Lee Siew Choh. Hoe Puay Choo, Leong Keng Seng. Madam. Lim Yew Hock. Kandasamy, G. Lin You Eng. Lee Khoon Choy. Lingam, S. V. Lim Cheng Lock. Low Por Tuck. Mammen. John. Marshall, David. Mohd. Ariff Bin Ng Teng Kian. Suradi. Ong Chang Sam. M. Ismail Rahim. Ong Eng Guan. Ong Pang Boon. Rajah, A. P. Rajaratnam, S. Seow Peck Leng, Ramaswamy, S. Mrs Sahorah binte Sheng Nam Chin. Ahmat, Madam. Tan Cheng Tong. Tan Kia Gan. Tee Kim Leng. Toh Chin Chye. Teo Hock Guan. Wee Toon Boon. Thio Chan Bee. Yaacob bin Mohamed. Wong Soon Fong. Yong Nyuk Lin. Abstention. Nil. Absent. Koh, C. H. Lee Kuan Yew. Lee Teck Him. Paired. Chan Choy Siong, Madam. (absent). Mohd. Ali Bin Alwi.

The Chairman: The result of the voting is 23 Ayes, 23 Noes, 3 Absent, and 2 Paired. Under section 53 of the Constitution - and I will read that section - it says:

`Save as otherwise provided in this Order, all questions proposed for decision in the Assembly shall be determined by a majority of the votes of the Members present and voting; and if, upon any question before the Assembly, the votes of the Members are equally divided, the motion shall be lost.'

Therefore, the motion is lost. There is now no clause 2 and the Bill is meaningless. Anyway, the Bill will have to be reported.