ASIAN DEVELOPMENT BANK BILL

Order for Second Reading read.

6.06 p.m.

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

Mr Speaker, Sir, I would first like to outline the reasons why Singapore has become a signatory to the Asian Development Bank Agreement. Firstly, by joining the Asian Development Bank, Singapore will have an additional source of loans open to it. The Asian Development Bank has an authorised capital of $1,000 million. Its paid-up capital will be US$100 million in the first year of its operations and this amount will rise up to US$500 million by the fifth year. In addition to its share capital, the Bank can also raise loans from major financial markets to supplement its own funds for loan operations. Also, if approved by the Board of Governors of the Bank, the Bank can participate in equity. This may turn out to be a useful source of funds for some of Singapore's future industrial projects. Secondly, participation in the Bank associates Singapore with other Asian countries in the field of regional co-operation.

There are 31 signatories to the Asian Development Bank Agreement of which 19 are regional countries and 12 are non-regional countries. Subscriptions to the share capital of the Bank by various countries are in accordance with financial resources and commitments of the various countries concerned. Singapore's subscription to the Bank is US$5 million, half of which will be paid in five equal annual instalments of US$500,000 each. Each such instalment is divided equally into convertible currency and local currency. For each of the five years, therefore, Singapore will be required to pay US$250,000 in convertible currency and US$250,000 in local currency.

To enable Singapore to ratify the Asian Development Bank Agreement, it is necessary that appropriate legislation be enacted. Upon ratification of the Agreement, Singapore will become one of the original members of the Asian Development Bank.

The legislation therefore authorises the President to appoint someone to deposit the Instrument of Ratification with the Secretary-General of the United Nations. Clause 4 of the Bill enables the Singapore Government to subscribe to the original authorised capital of the Bank. It also provides that should the Bank in future find it necessary to increase its original authorised capital, Singapore is able to subscribe towards such an increase provided that such subscription does not exceed US$5 million. Singapore's subscription to the Bank shall be charged, in the first instance, to the Consolidated Fund. The Government however may raise loans for the purposes of providing any sums required for making any payments to the Bank. Also, in lieu of payments to the Bank in local currencies, the Government can also create and issue to the Bank non-interest-bearing and non-negotiable notes or other obligations. The Bill also seeks to give legal effect to the provisions of Chapter VIII of the Agreement which provides for the granting to the Bank and its officers and employees certain status, exemptions and privileges. These privileges are similar to those granted to other international institutions, for example, the International Monetary Fund and the International Bank for Reconstruction and Development of which Singapore is also a member.

Sir, I beg to move.

Question proposed.

6.14p.m.

Mr Tang See Chim: Mr Speaker, Sir, I rise to support the Bill. The reasons outlined by the Parliamentary Secretary to the Minister for Finance for Singapore to join the Asian Development Bank are cogent enough. By becoming a member, Singapore will be able to take advantage of not only the financial facilities of the Bank, but also other technical facilities. Looking through the Bill, however, I see that clause 9 (1) provides for certain provisions of the Agreement of the Bank to have the force of law in Singapore. And turning to paragraph 2 of Article 56 as published in the Schedule of the Bill, it would appear that employees of the Bank, irrespective of their status, would have facilities offered to them, amongst which facilities is the exemption from income tax. Now, most countries in the world always reserve the right to themselves to tax their own nationals and I see no reason why Singapore should be an exception; that is, I see no reason why Singapore should give up the right to tax its nationals simply because they are employees of the Bank. I wonder whether the Parliamentary Secretary to the Minister for Finance will give this House an undertaking that employees of the Bank, at least the clerical staff, will not get exemption from the tax laws of Singapore. Subject to that reservation, Mr Speaker, Sir, I support the Bill.

Mr Ramaswamy: The hon. Member's suggestion not to exempt local employees of the Asian Development Bank from payment of income tax will be considered by the Government. We will find out what agreement there will be with regard to this point among the member countries. There are implications which we have to weigh in this matter. If we agree to the Member's request straightaway, we may not get good local technical officers to come here and help us in our projects. But the hon. Member has earlier stated that he wants the clerical officers not to be exempted from income tax. I can assure him that the clerical officers will have to pay income tax. This category of workers will definitely pay tax, but not the technical officers.

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