FREE TRADE ZONES BILL

Order for Second Reading read.

5.46 p.m.

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

Sir, the object of this Bill is to provide the permissive legal framework for the establishment of free trade zones in Singapore to preserve and promote the entrepot and transit trade.

To attain a rapid rate of economic growth and to provide employment opportunities for a growing population, the Government has embarked on a programme for rapid development of the industrial sector. At the same time all efforts must be made to safeguard the interests of the entrepot trade as it is still the most important sector of the economy and the main source of foreign exchange. With the end of confrontation, prospects have returned for not only maintaining but even expanding the level of entrepot trade. In addition, new trade links are being forged with new countries who did not trade with us before. Attracted by Singapore's excellent distribution facilities, commercial connections and other ancillary services, these countries are expected to utilise the Port of Singapore for selling their goods in this part of the world.

A free trade zone for Singapore to replace her free port status was recommended by a World Bank Mission in July 1963, when the Telok Ayer Basin was suggested as the site for entrepot goods discharged by lighter and other small craft. During Malaysia, the site was initially developed and legislation drafted so as to declare the Basin and the port for the purpose of establishing the first free trade zone in Singapore. In the zone trading and entrepot activities would be entirely free from customs control. Upon separation, the draft legislation was revised yet again to suit the changed short-term conditions, but not to lose sight of the longer-term interests of this region as a whole. The views of representatives of the four Chambers of Commerce, as well as the Singapore Manufacturer's Association, on the desirable permissive legislation for the establishment of such free trade zones have been solicited during the drafting of the permissive legislation now before Parliament, and it is considered that for the large entrepot trade of Singapore, specially designated free trade zones in addition to licensed and bonded warehouses with drawback facilities provide the best solution. From within such zones, the entrepot and transit trades can be conducted without the payment of any tariffs and with the minimal customs control. In the principal customs territory, additional Government licensed factory warehouses will continue to be utilised for the storage of dutiable goods, particularly high-duty goods as at present.

Turning to the contents of the Bill, I would like to elaborate on the more salient clauses.

Sir, clause 4 allows for the designation of any areas in Singapore as free trade zones and for the appointment of the authority to administer and operate such zones.

Clause 6 defines the operations which will be permitted within a free trade zone. Goods which are not specifically prohibited may be brought into free trade zones, destroyed, sent to customs territory or exported to any other country. Goods may be stored, processed, exhibited and manipulated within a free trade zone. Goods which are brought into the free trade zone from "customs territory", shall be regarded as exported for the purpose of claiming drawback on duty.

Under clause 11, the Minister may permit manufacture to be carried out in the zone as this is necessary to cater for existing manufacturers within the envisaged free trade zone, and also to allow for the setting up of export-orientated industries where feasible.

Sir, clause 7 provides powers for the regulation of operations, customs supervision and control within the zone.

Clause 8 makes provision for the calculation of duties to be levied on goods manufactured in the zone when they are bought into the "customs territory". This is an important clause to protect the interests of the manufacturers in the "customs territory" and will ensure that manufacturers sited in the free trade zone area do not enjoy undue advantage over manufacturers in the "customs territory".

Clause 10 regulates the consumption of dutiable goods within the zone.

Clause 12 deals with the responsibilities and functions of the authority administering the zone such as maintenance of proper facilities for the zone and provision for customs checks, collection of revenue and prevention of evasion of duties.

Clause 14 gives powers to the administering authority to exclude or remove goods which are prejudicial to the public interest or safety.

Clause 15 provides for the maintenance of accounts as prescribed.

Clauses 20 to 24 make provision for dealing with offences and contraventions of the law.

Sir, I beg to move.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. -[Mr Ramaswamy]

Bill considered in Committee.

[Mr Speaker in the Chair]

5.56 p.m.

Clauses I to 11 inclusive ordered to stand part of the Bill.

Clause 12 -

The Chairman: In line 21, there is a clerical error. The line reads: "The Authority shall permit customs officers. -.". It should be

"offices". The "r" there should be deleted so that it reads: ".., shall permit customs offices to be established . .

Clause 12 ordered to stand part of the Bill.

Clauses 13 to 25 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.