ECONOMIC EXPANSION INCENTIVES (RELIEF FROM INCOME TAX) (AMENDMENT) BILL

6.12 pm

Order for Second Reading read.

The Minister of State for Trade and Industry (Mr Mah Bow Tan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Last year my Ministry proposed an overseas investment incentive to encourage local companies to invest abroad to gain access to technology as well as overseas markets. This incentive is basically an extension of the Venture Capital Incentive which was announced in the 1986 Budget Statement. It will now cover all types of overseas investments that yield market, technology and/or economic benefits, besides investments in new technology. It was approved by the Ministry of Finance and announced in the

1988 Budget Statement.

This incentive allows a company to deduct up to the full amount of investment, any loss arising from the sale of shares in an approved overseas investment project. The major provisions are:

(a) It will be available to any local resident company that invests in an approved overseas project which would (i) provide access to technologies and/or overseas markets; and/or (ii) promote or enhance the technological or economic development of Singapore.

(b) Within a period of eight years from the date of approval, any loss arising from the sale of shares or liquidation of the approved overseas project can be offset against the company's other income; and

(c) Relief would be given on the difference between the purchase of the shares and the fair market value of the shares at the time of sale or, in the case of liquidation, the purchase price and the proceeds from liquidation.

The Bill proposes to amend Part XIIIA of the Economic Expansion Incentives (Relief from Income Tax) Act on "Venture Capital Incentives" to implement the incentive. The amended Part XIIIA will be referred to as "Overseas Investment and Venture Capital Incentives".

Sir, I beg to move.

Question proposed.

Mr Chew Heng Ching (Eunos GRC): Sir, I shall be very, very brief. I fully support the Bill. I have one observation and that is the Bill is silent on the definition of "technology". In implementing the Bill, I think the Ministry should be liberal in the definition of "technology". It should include not just scientific and technical know-how. I think the definition should be extended to include management skills, professional expertise and so on. So I would like the Ministry to consider being liberal in the definition of "technology" in implementing the Act.

Mr Mah Bow Tan: Sir, I thank the Member for supporting the Bill. May I refer him to clause 4 (subsection (4)) of the proposed Bill, and I quote:

'Where the Minister is satisfied ... that the technology acquired ... would promote or enhance the technological or economic development of Singapore ...'. I hope the Member for Eunos GRC would agree with me that this definition allows sufficient leeway to include as many of the things that he mentioned as possible, so long as the Minister is satisfied that the activity would promote or enhance our economic development.

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 Mah Bow Tan].

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