COMPANIES IN ARREARS OF CPF CONTRIBUTIONS (Figures)

Mrs Yu-Foo Yee Shoon asked the Minister for Labour (a) what were the number and percentage of companies in Singapore which were often in arrears in Central Provident Fund contributions as at the latest convenient date; (b) what was the number of companies under receivership in 1986 which did not pay up their CPF contributions; and (c) to date, what is the highest amount owed to the CPF Board by any one company in Singapore.

Mr Lee Yock Suan: Mr Speaker, during the second half of 1986, 3,916 employers were habitually late in making their CPF contributions, ie they were late in making their contributions for three or more months. This number constitutes about 6% of the total number of employers making CPF contributions.

31 companies which came under receivership in 1986 were in arrears in their CPF contributions. The CPF Board has filed claims with the Receivers and Managers for the arrears and is awaiting payment from them.

To date, the highest amount of contributions owed to the CPF Board by an existing company is $803,940. This amount is owed by Southern Ocean Shipbuilding Pte. Ltd. The company has repeatedly been in arrears since June 1984. Action by the Board has led to the recovery of some $2.7 million in arrears and penalty interest. The Board has subsequently taken up winding-up action against the company to recover the rest of the contributions. Under court order, the creditors of the company have met and most of them have agreed to an arrangement for the settlement of debts proposed by the company. The Board will be paid the CPF arrears by 18 monthly instalments.

Mrs Yu-Foo Yee Shoon: Does the Minister not agree that the 25% CPF contribution from the employee is money earned through the blood and sweat of the workers? Therefore, this money should be given greater priority than what is presently provided under the law when a company winds up.

Mr Lee Yock Suan: Under the existing law, when a company is wound up, the first priority of claims goes to the secured creditors. These are the bankers and others who have provided financing to the company based on a first charge on the assets. After this come the unsecured creditors. First on that list is winding-up expenses. Second come salaries, including employees' CPF contributions. Third on the list would be workmen's compensation for injuries incurred during work. Fourth, salary in lieu of leave. Fifth, employer's CPF contribution. So the Member can see that the contributions deducted from the employees' salaries, ie the employees' CPF contribution, already ranks very high in terms of priority under the category of unsecured creditors.

As to whether we should change the arrangement for secured creditors, I think I have given my answer previously. I do not think we should do that because it may affect the willingness of banks to extend loans to businesses. The problem at the moment is well under control. I can give the Member some figures to indicate this. For example, of the 3,916 employers who were late in the second half of last year, they owed an amount of $31 million altogether. The CPF Board has succeeded in its measures to recover $23 million. The balance that is still owing is only $8 million. If we compare this to the total CPF collected in the second half of 1986, it was $2 billion. So the amount owing by these roughly 4,000 employers is only 0.4% of the total CPF collections due. So the mechanism has already been effective and there is no need for us to make further changes to the law.