DEVELOPMENT LOAN (AMENDMENT) BILL

Order for Second Reading read.

3.07 p.m.

The Minister for Finance (Dr Goh Keng Swee): Sir, I beg to move, "That the Bill be now read a Second time."

This Bill seeks to amend the Development Loan Act, 1967, to allow the Government to raise loans in the domestic market by the issue of bearer bonds. The bonds will be issued in such denominations and under such conditions as may be decided by the Government.

Hitherto, the Government has been issuing only registered stock which requires registering on purchase and whenever the ownership of the stock is changed. Such stocks, therefore, appeal to a limited market and we have found that our past issues have been mainly subscribed by institutions who hold such stocks till maturity.

To increase the attractiveness of our loan issues, the Government proposes to issue bearer bonds as well. These bonds are payable to bearer and transferable by delivery without endorsement or registration. The names of stockholders will not appear on the stock certificate, neither will a register of stockholders be kept, so that anonymity of subscribers will be preserved. Interest coupons will be attached to the bonds, and on each date when interest is due, such coupons may be cashed at the nearest bank or with the Registrar of Loans. It will be clear from this brief description that the administrative work involved will be reduced considerably.

The provisions of the Development Loan Act, which require sinking funds to be established to meet redemption of a loan floated, will however continue to apply to bearer bonds issued under this Act. So, once a loan is floated, money to meet its redemption is automatically set aside each year. Such bearer bonds, when issued, will become negotiable instruments and we hope this will encourage greater public participation in the mobilisation of capital for development.

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. -[Dr Goh Keng Swee].

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