CUSTOMS (AMENDMENT) BILL

[Mr Speaker in the Chair]

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Customs (Amendment) Bill will make it an offence for a person in charge of a motor vehicle registered in Singapore to leave or attempt to leave Singapore without more than half a tank of petrol in that vehicle. Under the Amendment Bill, Singapore motorists will be liable on conviction to a fine not exceeding $500. For this purpose, I draw the attention of the House to clause 2 of the Bill. The regulation will not apply to foreign registered vehicles which hold valid permits to enter and remain in Singapore.

Mr Speaker, Sir, the Government has been concerned for some time now over the increasing number of Singapore motorists going across the Causeway to fill up with petrol which is cheaper in Johor. This action undermines the Government's use of petrol pricing as one of the measures to curb car usage in Singapore. The main purpose of the Bill is therefore to ensure that the use of petrol pricing to control the usage of roads in Singapore is not bypassed. Additionally, loss of duty on petrol is estimated at around $2 million a month.

In order to curb the rise of road congestion in Singapore, the Minister for Communications and Information is studying measures to control car usage instead of just car ownership in Singapore. The use of petrol pricing is one of the measures being considered and if petrol duty has to be revised upwards as a result, motorists can simply beat the measure by buying their petrol in Johor. That was what actually happened in 1985 when the ad valorem duty on petrol in Singapore was raised from 50% to 60% in March that year. The volume of Singapore registered cars crossing daily to Johor immediately doubled, from an average of some 3,000 per day to over 6,000 per day. In September 1985, the ad valorem duty was brought back to 50% as a counter recession measure and the volume of cars crossing to Johor immediately fell back to some 3,400 per day. For most of 1986 and 1987, the Causeway crossings fluctuated between 3,000 and 4,000 per day, reflecting normal car travel to Johor on business, shopping or leisure.

Since last year, there has been a steady rise in the number of daily crossings again. They now average more than 6,000 per day and on holidays, sometimes more than 10,000 cars cross over into Johor in a single day. No doubt other factors, unrelated to petrol prices, have contributed to this increase. Many Singaporeans now visit Johor to enjoy the beaches and entertainment and to take advantage of the cheaper shopping and seafood and these attractions will continue to draw Singaporeans into Johor. But part of the traffic clearly results from the difference in petrol prices, which is now 25 Singapore cents per litre cheaper in Johor. This price difference makes it worthwhile for some Singapore motorists to visit Johor just to buy petrol and for others who are already there to top up.

Mr Speaker, Sir, I would emphasize that the purpose of the amendment is not to discourage Singaporeans from visiting Johor. Indeed, the opposite is true in that the Government is committed to the development of economic relations with Johor and to cooperate in the development of the tourist industry in Johor. There are many attractions which draw Singaporeans to visit Johor for their leisure and the Government wants to encourage this trend. Work has started on increasing the number of clearance lanes at the Woodlands Checkpoint in order to speed up traffic clearance. The existing Causeway is already being widened. A ferry link to Southwest Johor will soon be established. A second road-link is under consideration. We can expect, and indeed we want, more Singaporeans to go to visit West Malaysia, just as we welcome more Malaysian visitors to Singapore.

A decision on the control measure to be used was only made after careful consideration of its impact on Singapore visitors to Johor. The measure had to be simple to operate, should not inconvenience the motorist unduly or cause traffic congestion which would affect the flow of traffic to Johor. The half-tank measure was chosen because it satisfied all these requirements. Many alternative measures were examined and Members may be interested in a few which were considered but not accepted for a variety of reasons.

(a) The imposition of a levy on every Singapore registered car either entering or leaving Singapore was considered seriously. The levy would be adjusted periodically to offset the price advantage of buying a tankful of petrol in Johor. For example, the present difference in the price of petrol between Singapore and Johor is 25 Singapore cents per litre. If a typical 1.6 litre car with a fuel capacity of 52 litres tops up with 40 litres of petrol in Johor, the savings to the motorist would be $10. An exit or entry levy of $10 would therefore offset this price difference. A levy would be the simplest scheme to implement. But we decided against it because we did not want it misunderstood that the Government was indiscriminately opposed to Singaporeans visiting Johor. However, if the half-tank regulation should prove to be ineffective, a levy may have to be reconsidered.

(b) The imposition of excise duty on petrol purchased in Johor and imported into Singapore was another measure which was considered. On the surface, this would appear to be a fair and equitable control measure as it would only affect motorists who actually bought petrol in Johor. Unfortunately, it is unworkable in practice because there is no simple way to identify petrol bought in Johor from petrol bought in Singapore when they are mixed together in the same tank. To do so would require the addition of chemical tracers to petrol sold in Singapore. It would require the draining of petrol from fuel tanks of cars entering Singapore and the analysis of this petrol. The procedure would be hazardous, time consuming and would lead to massive traffic congestion at the Woodlands Checkpoint.

(c) Another measure considered was to require all Singapore registered cars to top up their fuel tanks at designated petrol stations near the Woodlands Checkpoint before they are allowed to cross the Causeway. This would have been an effective control measure but is likely to cause severe congestion at these designated stations and traffic hold-ups along the approach road to the Woodlands Checkpoint, particularly during peak holiday periods.

The implementation of the regulation will be carried out with the least inconvenience to the motorist and in a manner which will avoid interrupting the smooth flow of traffic at the Woodlands Checkpoint. Under the proposed regulations, when a Singapore registered vehicle passes a specified point on the road approaching the Woodlands Checkpoint, its fuel tank must contain more than half of its total capacity of motor spirit, failing which, any person in charge of such a vehicle shall be guilty of an offence and will be liable on conviction to a fine not exceeding $500. Mr Speaker, Sir, the more than half-tank requirement is proposed for practical reasons, even though a full-tank requirement would have been much more effective.

Officers from the Customs and Excise Department will carry out random visual checks on the fuel gauges of vehicles which have passed the designated point and this will be done when the motorists are queueing up for immigration clearance. I would emphasize that in the initial stages, the officers would use their discretion in enforcing the regulations and would, wherever possible, give motorists the benefit of the doubt. On the other hand, Mr Speaker, Sir, I would like to point out that if the control procedure proposed should prove ineffective, other more stringent measures may have to be introduced.

Full details of the control and operating procedures will be released after the Amendment Bill has been approved by Parliament and has received Presidential assent. My colleague, the Minister for Communications and Information, will also be presenting amendments to the Road Traffic Act later today, on matters relating to motor vehicle fuel gauges, insofar as they affect the implementation of the control measures proposed under the Customs (Amendment) Bill (Bill No. 20/89).

Sir, I beg to move.

Question proposed.

Mr S. Chandra Das (Cheng San GRC): Mr Speaker, Sir, in speaking on this Bill, my objective is really to reflect some of the views that have been gathered from grassroots leaders, businessmen, executives, housewives, taxi-drivers and hawkers.

Sir, most of the people I talked with felt that this "half-tank" measure is really not necessary and they gave many reasons to support their view. Before I go into the reasons, I would like to make one comment, in that this Bill was widely discussed after the First Reading without the benefit of a full explanation which normally comes through at the Second Reading, which we just heard from the Minister. The single statement from the Government was obviously not sufficient. In fact, the explanation was ineffective.

Sir, now let us look at the reasons as to what causes unhappiness with some of the Singaporeans we talked to. Firstly, many believe that checking of the cars at the Causeway, however minimal, would cause traffic jams and hence inconvenience. Without these checks, the time taken to cross the Causeway during weekends and public holidays is already bad enough. These new checks, however random it may be, will only add to the existing jam.

Secondly, Sir, as a control measure on car usage, this new measure will not be a totally effective mechanism. Singaporeans can still enter Johor with a half tank and fill it up to a full tank before returning to Singapore. As a measure, this is only a "half measure" and many Singaporeans find it very difficult to understand why Singapore Government has now gone for half-measures. Sir, why not insist on a three-quarter tank or better still, a full tank. And I am glad to note that the Minister is prepared to consider if the need arises.

Sir, thirdly, many Singaporeans also felt that this measure is another attempt to restrict movements of Singaporeans and they are quite unhappy. One person even went on to say that this measure is being introduced out of envy of Singaporeans having a good time in Johor Baru. Many Singaporeans go to Johor for seafood, shopping, recreation because of the exchange difference and not merely for the sake of buying petrol. This requirement of "half-tank" is viewed by some Singaporeans as Government interference in their free movement.

Sir, the fourth and last reason is that this measure will affect our relations with Malaysia, and in particular with Johor. In this respect, I also share my own concern on this area. I would like to ask the Minister for Finance whether this is a good neighbourly act. I concede on the arguments about leakage and revenue loss, especially when the Minister for Communications and Information had indicated in this House that further hike on petrol prices is imminent. Is this leakage really such a big drain on our coffers?

Sir, our relations with Malaysia are at the best possible level at this point of time, and I fear that mischief makers will exploit this "half-tank" measure to disrupt this level of relationship. Do we want this to happen? Why are we creating an opportunity for such mischief makers?

Sir, this action of ours shows us as being rather petty and that we always want to be on top. Once we are at a disadvantage, we tend to over-react. In a way this reminds me of the Malaysia Singapore Airlines/Mercury Singapore Airlines episode.

Sir, in conclusion, let me say that we have good grounds to go ahead with this measure. I hope the Minister for Finance, Minister for Communications and Information and the Minister for Foreign Affairs can assure this House that this "half-tank" measure will not generally affect the good relations between Singapore and Malaysia. These relations have been built at all levels from the Prime Minister, Ministers and civil servants downwards, and this should not be nullified by a simple half-tank measure.

Dr Hong Hai (Bedok GRC): Mr Speaker, Sir, last week's Straits Times carried an article about the collection of short stories by Singapore author, Catherine Lim.

One of the stories is about a civil servant called Mr Sai Koh Phan. Sounds like "sycophant". Mr Sai contracts a strange crippling disease because of following too zealously all the rules and campaigns of the Government. I have not read the story, but apparently the cure for him and other civil servants was to find private opportunities to spit, to litter, to stop eating frozen fish without feeling guilty, and so on. The story has a happy ending. The right therapy was found when the Government bought a piece of land in Johor for civil servants to let their hair down, break some rules. I guess if Catherine Lim were to write her story today, she would also give them the personal satisfaction of buying cheap petrol over there, after Parliament passes the Customs (Amendment) Bill.

Sir, my point is not a frivolous one. I think it is a sign of a more grown-up society that a noted local author is able to write a gentle satire on our disciplined society. It cannot be denied that we live under fairly regimented conditions. But it is also a fact of life that some discipline is essential to our economic progress and our quality of life.

Such dicipline has its costs. Occasionally, government intrusiveness in our lives gets to some of our people, particularly the young and the educated who have not experienced the alternative of an undisciplined society and therefore may not appreciate as much what we now have.

Sir, it is in this context that we should view the irate reactions of the public to the two Bills. The reaction has been vehemently negative even among those who never go to Johor. Government has been accused of being picky, petty, and petulant. The so-called "half-tank" Bill has sometimes been called a "half-brain" Bill, as well as a number of more graphic names that cannot be repeated in this Chamber.

Sir, over the last three weeks I have personally conducted an informal survey of motorists, grassroots leaders and professionals. Their grouses are genuine and their apprehensions are sincere. I would like to highlight three of them.

First, they concede that Government has the right and the duty to collect petrol taxes and close tax loopholes when these are serious enough. Tax loopholes are a fact of life, here in Singapore as in other countries. Clever lawyers in Australia and America make a good living out of helping people exploit tax loopholes. The question is: Is the problem of petrol from Johor serious enough to justify such severe measures? Are we trying to kill a fly with a sledge-hammer?

Second, the new measures can potentially cause great inconvenience to motorists. It could lead to traffic jams near the Causeway. And it raises the spectre of nasty Customs officials peering into cars to check fuel meters.

Third, the Bill is unfair to people who go to Johor mainly for entertainment rather than to buy cheap petrol. These people may be victimized because they happen to have faulty fuel meters in their cars or they inadvertently fail to have more than half a tank.

Sir, these complaints appear to be well-founded. But let us examine them a little bit more carefully. Consider the last two objections: congestion at the Causeway and inconvenience to motorists. Are we going to have long queues near the Causeway as a result of this new law? In my view, this scenario is improbable. To start with, most of the time the average car in Singapore already has more than half a tank of petrol. The reason is quite simple. Most of us fill up our petrol tanks long before it goes empty. It is prudent and gives us peace of mind. We do not want to run out of petrol while on the road. If we tend to fill up at, say, a quarter tank rather than wait for it to be empty, then most cars would have between a quarter tank and a full tank or, on average, about 63% full tank. Mathematically, this means 63% of the time, we already have half a tank or more. Queues at petrol stations near the Causeway are therefore unlikely, especially after people get used to the new rules.

Sir, furthermore, I believe that Customs will simply not have the manpower to check too many cars entering the Causeway. The checks would have to be done on a low sampling basis. I doubt that there would be congestion as a result of random checks. The bottleneck will continue to be the immigration points in Johor, not petrol meter checks by Singapore customs officers.

Sir, it is true that motorists who go to Johor for entertainment and shopping will be slightly inconvenienced by this new measure. They have to take care that the tanks are at least half full. But this only means occasionally a need to top up, and this need not be done at the Causeway. The time it takes is insignificant compared to the queueing time for going through customs and immigration.

As for meters that are inaccurate or occasionally faulty, it is necessary for the ROV to exercise prudence and consideration in dealing with these cases. Only those who clearly tamper with their gauges or who are grossly negligent in not repairing the obviously faulty meter, should be subject to severe penalties. There is a fine line between a meter that is faulty and one that is inaccurate. In practice, no meter can be totally accurate. I hope that the Minister for Communications and Information will prevail on his officers to be flexible and not to be overly stringent in handling such cases.

Sir, I now turn to the first objection, and to me the potentially more serious one. Is the tax leakage serious enough for such strong measures? The Minister for Finance has explained the economic rationale for discouraging motorists from buying petrol in Johor. His is an unpleasant task and he has my sympathy. The Minister has a job to do. It is also his duty to close obvious tax loopholes and to see that fiscal measures to discourage road usage are not undermined by cheap petrol from across the Causeway.

How serious is the problem? If the figure of $2 million a month is correct, then it is a substantial leakage and effective measures are indeed called for.

The figure is indeed high. According to the Ministry of Finance's statistics, petrol duty amounts to some $300 million a year in Singapore. A leakage of $2 million a month amounts to $24 million a year or 8% of petrol revenue. This is equivalent to 1 in 12.5 Singaporeans filling all their petrol requirements in Johor. If you consider that the average person may fill only half his requirement in Johor, this is equivalent to 1 in 6 Singaporeans going across the Causeway to fill petrol. This I must say is a surprising figure. I would be much obliged if the Minister could reassure us of its accuracy.

Sir, even if the figure was exaggerated, there may still be a case for taking these measures. Petrol duty is going up, and the gap will widen and this will exacerbate the problem.

It would appear that the Government position on closing the tax loophole is logically defensible. Why then the furore over the half-tank Bill?

Much of the reaction of the public has been, in my view, of an emotional nature, a release of pent-up resentment over too much state tinkering with their lives. It is a symptom of a wider problem that this Government faces.

Sir, I want to suggest that on a matter like this which affects people's pockets and could raise emotional reactions, the Government takes more pains to explain the reasons for the proposed new measures to the public before formally presenting it to Parliament. True, once a bill is presented, our parliamentary system does not permit the bill to be explained until the second reading. But this does not mean that it cannot be explained to the public informally before the first reading.

Sir, I believe the Government could gain prestige and public support if it could conduct a more active public relations programme on such matters. The logic behind the two bills is difficult to fault. The Government can and will win the logical argument against the protesters. But we are not in the business of winning arguments. We are in the business of persuading people and winning support for good policies. I believe that in this instance we might have better prepared the ground by presenting the arguments for the bills up front before sentiment against is allowed to build up.

Sir, I hope the Ministers for Finance and Communications and Information will reassure the public that their officials will not be over-zealous in the administration of the new laws; that the benefit of the doubt be given to those whose meters are not totally accurate through no fault of their own, and that every effort will be made not to inconvenience motorists who want to enjoy their weekends in Johor.