SINGAPORE INSTITUTE OF STANDARDS AND INDUSTRIAL RESEARCH (AMENDMENT) BILL

Order for Second Reading read. 1.12 pm

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

The responsibilities and activities of the Singapore Institute of Standards and Industrial Research (SISIR) this year have expanded since the Institute was established in October 1973. To help industries meet the changing demands of the local and overseas markets, SISIR has stepped up its programme in technology transfer and industrial R&D, and internationalised its standardisation and quality assurance activities. Thus, the main purpose of this Bill is to amend the SISIR Act to reflect the extended role of the Institute and to empower it to meet industry's new demands for technological infrastructure.

Section 15 of the Act which lists the powers and duties of the Institute is amended to specify more clearly that the two main functions of SISIR are, firstly, to promote the safety, quality and efficiency of products and processes in industry for local and international markets through standardisation, certification, quality management and the use of technology; and, secondly, to promote and undertake industrial research and development for the creation of new industries, the development of existing industries, and the improvement and introduction of technical skills and technology in industry.

A new section 15A separately sets out the Institute's powers and duties in carrying out these two main functions. These powers and duties reflect SISIR's expanded role in industrial R&D and standardisation. Specific provisions are made to allow the introduction of schemes of standardisation and certification, such as the Singapore Quality Mark, the Good Manufacturing Practice Mark, the SISIR ISO 9000 Certification Scheme and the Singapore Laboratory Accreditation Scheme Mark, and other new schemes that SISIR may introduce in the future to support its mission.

A provision is also included to enable SISIR to form companies and enter into joint ventures for the purpose of commercialising its R&D results and, where appropriate, to spin off certain services to the private sector in order to subject them to the discipline of the marketplace.

The opportunity is also taken to update the Act to bring it in line with that of other statutory boards and to provide for greater administrative flexibility.

Part of section 2 and all of sections 5 to 10 of the Act, which refer to the constitution and proceedings of the Institute, have been reorganised as the First Schedule to govern the constitution and proceedings of the Institute. Amendments are introduced to provide greater administrative flexibility to members of the Institute. This is in line with the flexibility given to other statutory boards.

The present provision under section 24(3) restricts SISIR by allowing investment in accordance with the law regulating the investment of trust funds only. This is amended to enable money belonging to the Institute to be invested in such securities as trustees may be authorised to invest or, with the written approval of the Minister, in any other securities or investments. The amendment would give the Institute greater flexibility and scope in investment while, at the same time, ensuring adequate safeguards.

Currently, there is no provision in the SISIR Act to give the Institute exclusive right to the use of its symbol and to impose a penalty on those who violate this principle. As the SISIR symbol increasingly represents to the public an assurance of good quality, we need to guard against anyone being misled by improper use of the symbol. A new section 33 is therefore introduced to provide for a maximum penalty of $2,000 for misuse of SISIR's symbol.

For similar reasons, there is a need to update the maximum penalties imposed for improper use of any of the SISIR marks. Section 43 has been amended to increase the maximum penalty from $10,000, which was introduced in 1973, to $50,000. This penalty will now also apply to persons who forge or, without lawful authority, alter a test report or certificate issued by SISIR. The general penalty for contravening any provisions of this Act or any regulations made under it has also been revised from $2,000 to $5,000.

Section 28 is amended to expand SISIR's power to raise loans, including temporary loans and overdrafts, to provide for greater flexibility in view of the Institute's extended role. The existing sections 25 and 29 to 32 governing the manner and procedures by which the Institute's audit of accounts and financial statements should be presented are amended to incorporate the standard requirements on audit matters as stipulated by the Auditor-General for all statutory boards. These are reorganised as a new Second Schedule.

It is intended that the amendments come into operation with immediate effect.

Sir, I beg to move.

Question proposed.

Mr Leong Horn Kee: Mr Speaker, Sir, I wish to take this opportunity to seek a few points of clarification from the Senior Minister of State for Trade and Industry on this Amendment Bill.

First, I must commend the Singapore Institute of Standards and Industrial Research (SISIR) for having, since its formation in 1973, successfully fulfilled its mandate, which is to maintain and upgrade the standards of industrial products of Singapore. The Minister mentioned that one of the functions of SISIR is to promote quality of our products and processes through quality management. Here, I wish to declare my interest, Sir, as Chairman of the Singapore Quality Institute (SQI) which is a professional body established since 1973 as well -- same year as SISIR. The objective of the Institute is to promote and advance the interests of Quality Control (QC) professionals in Singapore. I wish to ask the Minister what are SISIR's plans with regard to quality promotion in Singapore. More specifically, what role would SISIR play in quality promotion vis-a-vis other organisations such as the National Productivity Board which is also very active in quality promotion.

The second aspect I wish to ask the Minister is on the financial policy of SISIR. As mentioned in the Chairman's message in SISIR's 1990/91 Annual Report, it was stated that SISIR's revenue from services provided rose 14% to $26.5 million and I quote, "placing SISIR well in sight of its goal of making its cost-recoverable activities fully self-financing". Sir, in accordance with our most extolled "no subsidy" policy, that means no free lunches, this statement in fact is a laudable one. However, technology advances rapidly. The costs of some latest measuring and investigative equipment can be very exorbitant, but they are also very necessary for conduct of certain industrial research. Under such circumstances, the concept of full-cost recovery against the capital cost may be too high a cost-burden on the users, which are mostly the local industries.

Perhaps, the Minister can throw some light on the policy of SISIR. The worry of local industries is that the charges set by SISIR on the use of SISIR's facilities, and compliance with SISIR's various standardisation and certification requirements may add too heavy a cost burden that their products become less price-competitive. In addition, these industries may be discouraged to undertake new product developments if the base cost of conducting industrial research becomes too high.

Sir, may I voice my support for the Bill and request the Minister for his explanation?

Mr Chiam See Tong: Sir, may I also be allowed to seek some clarifications from the Minister.

I think SISIR's policy of getting full cost recovery does hurt local businessmen and also Town Councils. Our Town Council happened to send some paint to SISIR for testing and we were given a hefty bill of, I think, over $10,000. Fortunately, it was not paid by us. It was paid by the contractors. But SISIR should review its policy in respect of testing. It should try to reduce its costs and not to get back quickly all its cost on capital equipment.

As I look through the powers of SISIR, I note that under the new section 15A(n), SISIR is allowed to "form or participate in the formation of a company or companies and enter into any joint venture or partnership for the purposes of this Act". Would this power not be a conflict of interest with SISIR? SISIR is given a lot of articles, commodities, technical goods for testing, and probably they will know much of the specification and also of the possible technical secrets that are in the product. Would it not be tempted, if the product is a viable one, to use it for its own ends, form a company and market those products? There should be a clause which says that SISIR should be prevented from getting inside knowledge, so to say, for its own use. This would give confidence to the users of SISIR. Perhaps the Minister could look into this point.

Mr Lim Boon Heng: Mr Speaker, Sir, on the first point raised by the Member for Thomson GRC which is on SISIR's efforts in promoting quality, this is an on-going effort. It is not something which SISIR will do as and when it feels the need. But right now, every month, SISIR meets different industry sectors. They are invited by SISIR and they are given an explanation of what SISIR does and especially on the importance of ISO 9000 Certification Scheme. In addition to this, SISIR also produces brochures and pamphlets and these are distributed to industries - some of them through the Singapore Manufacturers' Association (SMA), some through the Association of Small and Medium-sized Enterprises (ASME). SISIR also conducts courses on quality and these are open to public application. Additionally, SISIR also undertakes consultancy work for any company that requires expert advice or work on quality improvement. As part of its work to promote quality consciousness among the industries in Singapore, SISIR will be organising a Global Quality Congress in June this year and I hope that Mr Leong, in his capacity as Chairman of SQI, would also encourage his members to take part in this Congress.

On the second question, which is also Mr Chiam's first question, on the self-financing principle of SISIR, I must say that SISIR's work is still very much subsidised in respect of quality and quality-promotion. The $10 million annual grant which SISIR gets from the Government is spent in this area. But for industrial research, which is meant for commercial application, the fact that SISIR has all this equipment actually lowers the cost to the individual company. So this is, in fact, a great help to the small and medium-sized enterprises in Singapore. If they have to purchase expensive equipment, then I think the cost for entering into new private development would be exorbitant, if not prohibitive. I think the fears expressed about the high costs of SISIR may be unfounded. But should companies find that they require additional financial assistance, apart from the lowering of cost by using SISIR's schemes, then they can apply for other forms of assistance. There are many schemes which are administered by the Economic Development Board. And in Mr Chiam's case, it is up to his contractors to see whether the particular project would have fallen under any of these schemes.

With regard to the question of possible conflict of interest, it is not SISIR's primary goal to enter into business. It does so in order to assist industries, and, as I mentioned in my speech, SISIR enters into this in order to set up new industries and to spin them off into the private sector. In fact, SISIR has got what is called the "incubator scheme" whereby promising entrepreneurs can take advantage of this scheme, ie, do the R&D in SISIR and once the project gets underway, goes out on its own; and indeed one such case, which I may quote, is Eutech Cybernetics which is a team of lecturers from the NUS who saw a market niche for themselves, took advantage of SISIR's "incubator scheme", got SISIR to participate in the equity and after the product is successfully launched, the company is financially viable, the company bought back the equity from SISIR. So the Member can be assured that it is not the intention of SISIR to compete with industries but to assist industries.

Mr Chiam See Tong rose ---

Mr Speaker: Mr Chiam, the debate is over. What is it that you want to raise?

Mr Chiam See Tong: Sir, I just want a clarification from the Minister. If that is the objective of SISIR - not to compete with local industries - is the Minister willing to recommend that the objective in new section 15A(n) be deleted? Then I think the business and commercial people in Singapore would feel very much safer to send their products to SISIR for testing.

Mr Lim Boon Heng: Mr Speaker, Sir, new section 15A(n) specifically says that the formation of such companies is for the specific purpose of this Act, and the mission of SISIR has been redefined, which is very clear. The discussion today makes it very clear that it is not the intention of SISIR to compete with industries.

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 Lim Boon Heng].

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