PAWNBROKERS (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Law (Prof. S. Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Pawnbrokers Act was last amended in 1977, some 13 years ago. Since then, the pawnbroking business has seen a phenomenal growth. The amount of loans given to the public in exchange for pledges increased 88% from $406 million in 1981 to $762 million in 1992. On a conservative estimate, some 2.5 million pledges pawned at 57 pawnshops in 1992 alone were valued at $1.3 billion. The public auction of unredeemed pledges for the period January to December 1992 saw an average of 20,000 pledges with a gross value of about $6 million sold each month.

Sir, the amendments before the House today are to ensure stricter control and supervision of the pawnbroking business through closer monitoring and regulation, greater enforcement of the law and stiffer penalties for breaches of the law. The Bill also enlarges the powers and jurisdiction of the Registrar of Pawnbrokers so that he can carry out his duties more effectively.

I think Members will know from press accounts that we have tightened and improved the auctioning procedures for unredeemed pledges since October 1991. This is to ensure that auctioning exercises were carried out in a fair and open manner. Changes in the auctioning procedures which were introduced administratively have been further improved and fine-tuned. New auctioning rules will be made to give effect to the new procedures when these amendments come into force.

Since the introduction of the new administrative measures in October 1991, a total amount of $1.3 million in surpluses has been realised from the auctions for payment to pawners. Prior to that, hardly any surplus (ie, the difference between the pawned value and the sale price of the unredeemed pledge which the pawner is entitled to) resulted from the sale of the pledges. And when any surplus was realised, the pawners were not informed as the present Act does not require the pawnbrokers to provide the information. Unless a demand is received from a pawner within four months of the auction, pawnbrokers are not under any obligation to refund the surplus.

In this regard, the amendments will safeguard the rights of pawners to any surplus and place the onus on the pawnbrokers to inform pawners of any surplus and to account to the Registrar for any deductions from the surplus before refunding any surplus to the pawners. Even pawners who fail to claim their surplus will not be deprived of their rights as these amendments provide for their right to make a claim at any time during a period of six years from the payment of any unclaimed surplus to the Accountant-General after which the unclaimed monies will be transferred to the Consolidated Fund.

In order for the Registrar to perform his duties more effectively, the Bill empowers him to order a pawnbroker to deliver pledges, books and accounts of his business on the expiration, cancellation or termination of his licence whenever he has reason to believe that any dishonesty on the part of the pawnbroker has taken place in the disposal of the pledges. Pawnbrokers will also have to provide insurance coverage against damage, theft or loss of pawned articles to ensure the protection of pawners. The deposit required to be lodged with the Accountant-General as security for the proper conduct of the pawnbroking business has also been increased from $5,000 to $20,000.

Existing penalties have generally been enhanced as a deterrent measure. In addition, three new offences have been created concerning the illegal handling of pledges by pawnbrokers. The Registrar will be given the power to compound minor offences prescribed as compoundable by the Minister. In short, Sir, this Bill is a consequence of the reforms and tightening-up which have been introduced with regard to the pawnbroking business.

Sir, I beg to move.

Question proposed.

Mr Chiam See Tong (Potong Pasir): Sir, I rise to support the Pawnbrokers (Amendment) Bill.

The Minister has mentioned about the great increases in the number of pledges and also in the amount deposited with pawnbrokers. This goes to show that there are still many poor people in Singapore. For this reason, the pawnbroking business seems to be on the rise. In fact, it is having a boom at the moment. Usually, these poor people ask for small loans and the pawnshop is the most convenient place to go. It is also a fact that poor people are in the greatest need for cash. Of course, I would not sympathise with those poor people who waste their money on gambling and pawn their assets away, but I do sympathise with the poor who have need for quick cash in cases of emergency. In this respect, the pawnbrokers do provide a social service to improvident people. Fortunately, the law has been tightened against pawnbrokers, in particular, in keeping down the interest rates on loans at 1 1/2% per month. Also, there are now further safeguards and we note that in clause 10 there are safeguards against pledges. Tampering or destroying a pledge is going to be an offence. I think most of the people who have dealings with pawnbrokers would welcome this clause. Of course, I also welcome the further tightening and enhancing of the punishment sections to keep pawnbrokers in line, and also in safeguarding the pledges of people who pawn their items with the pawnbrokers. Sometimes they have to do it. This is really no fault of theirs.

I would like to get some clarification from the Minister, in particular, on clause 3. It says here that the premises to be licensed must be suitable for use as a pawnbroker's shop. I am puzzled as to what type of premises can be suitable for use as a pawnbroker's shop. The Building Control Division, in fact, has strict control of commercial premises. Are there any premises that are particularly marked suitable for a pawnbroker's shop?

We also welcome that there is insistence of adequate insurance taken up by pawnbrokers in case of damage or loss of articles. In this respect, I would like to ask the Minister what is exactly meant by "adequate insurance".

I notice that the deposit of pawnbrokers has been increased from $5,000 to $20,000. Is there a need for this amount to be increased?

As I look at the Pawnbrokers Act, I notice at Schedule B that some of the payments that are paid to pawnbrokers seem to be minuscule in the light of today's standards. To be fair to pawnbrokers, I would ask the Minister perhaps to look at these payments which the pawnbrokers are entitled. For example, inspection of sale book's entry per sale is only two cents; the charge on form of declaration where the loan is $2 or under, it is only one cent chargeable by the pawnbrokers; and for a loan of above $2, it is only two cents. Perhaps, the Minister could look at them and include them in the amendments.

Mr Low Thia Khiang: Sir, I have two questions to ask the Minister. What is the rationale for requiring pawnbrokers to pay the surplus to the Accountant-General? Secondly, would the Minister consider donating this surplus, which is payable to the Accountant-General, to a charitable organisation in Singapore? I consider this payment of surplus to the Accountant-General as extra income for the Government.

Mr Chng Hee Kok: Sir, I rise to support this Bill. Just a question for the Minister to consider, and this is the question of insurance against damage and theft of articles. When the articles are auctioned off, there is a surplus. The amount could be claimed within four months. Within these four months, there is really no insurance cover for the person who pawns his articles. Is there any way that this person can be protected? Under the present Bill, there is a gap of four months.

Mr Chiam See Tong: May I ask the Minister how many registered pawnbrokers are there in Singapore today?

Prof. Jayakumar: I want to thank the Members who have spoken.

First, Mr Chiam concludes, from the figures that I have given, that there must be a great deal of poor people using these pawnshops. In fact, this is not necessarily so. I had a discussion with the Registrar of Pawnbrokers and he has, in fact, said to me that patterns have changed. In his dealings with pawnbrokers, his assessment is that it is no longer the poor or the needy who are compelled to go to the pawnshops. In fact, more wealthy people and businessmen are resorting to their valuables to raise funds for various purposes to meet short term needs for working capital, as pawning an item is a quick method of obtaining finance. So I asked him for examples. He also pointed out that there are less formalities to be observed than going to the banks for loans because no further security is required. He has pointed out to me that this is demonstrated by the large number of branded goods and other valuable items that are appearing at the auctions. For example, the April 1993 auction saw a gold ingot pawned at $16,000, a gold diamond Rolex watch pawned at $14,000, two gold Rolex watches with gold bracelets pawned at $9,000 and $8,000 respectively, three gold bracelets pawned at $8,000. In one previous auction, there was a jewellery box which had been pawned at about $40,000. So patterns have shifted and it is not that huge crowds of poor people are going to these pawnbrokers.

On his question about the amendment to the premises, actually if he looks at the original provisions of the Moneylenders Act, this amendment is to improve the existing provision because the existing provision requires the Registrar to be satisfied that the premises to be licensed are structurally adapted for use as a pawnbroker's shop and in all other respects are suitable for that purpose. So the amendment is a better approach because, as he said, those aspects should be really covered by the Building Control Division.

As for adequate insurance, this will be necessary, but the exact quantum of it must be left to the Registrar of Pawnbrokers to decide.

He has mentioned the point about the payments which the pawnbrokers are entitled to. I take his point that there should be a review whether these are minuscule or not.

His final question on the latest figure of pawnbrokers, I have to ask the Registrar of Pawnbrokers for the details and give it to him.

Mr Low Thia Khiang asked why the surpluses which are unclaimed must go to the Accountant-General. This is a general principle of financial procedures in the Government. As to whether it should be donated to charity, because he considers this as extra income for the Government, what is wrong with the extra income for Government? It goes to the State, which is then used for all sorts of development purposes. I see nothing wrong with it. Unless the Finance Minister tells me that the Registrar of Pawnbrokers is doing something inherently wrong, I think we should keep to that provision.

Mr Chng Hee Kok raised the question of whether there will be insurance coverage during the interim period before it is sold. This is a question which I will ask the Registrar of Pawnbrokers to consider. I think it is a fair point that it should be covered by insurance at that time.

Mr Chiam See Tong: Can I clarify with the Minister in regard to my point about poor people going to the pawnshops for loans? I stand to be corrected. It seems to me that pawnbrokers are only allowed to loan up to a limit of $1,000.

Prof. Jayakumar: As I have said, the information given by the Registrar of Pawnbrokers is that items have been pawned for as much as $40,000. So obviously, that is not so.

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. - [Prof. Jayakumar].

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