STOCK EXCHANGE OF SINGAPORE (Investment of CPF savings by contributors)

Mr Chng Hee Kok asked the Minister for Labour how many Central Provident Fund contributors used their savings to invest in the Stock Exchange of Singapore in 1991, 1992 and 1993 (up to the latest convenient date).

The Minister for Labour (Dr Lee Boon Yang): Sir, the number of CPF contributors who used their savings to invest in the Stock Exchange of Singapore is as follows: Year Number 1991 34,675 1992 34,520 January to July 1993 55,520

Mr Chng Hee Kok (Tampines GRC): Sir, is the Minister aware that, in view of the liberalisation of the scheme where capital gains may be withdrawn from CPF, a certain level of price fixing or manipulation is possible, and is he confident that the CPF Board and the computer system are adequate in coping with the task of keeping track?

Dr Lee Boon Yang: Mr Speaker, Sir, the arrangement to allow CPF members to withdraw their capital gains from their investments in stocks and shares should not result in a greater opportunity for price-fixing by any individuals or group of individuals. In this respect, I would like to assure the Member that there should not be any possibility for price-fixing which will benefit individual members who are investing their CPF savings.

On the question of security features of the CPF system, in view of the large number of CPF members now investing in shares, the Board has, in fact, looked into this matter extensively. It is well aware of the need to ensure that members who enter the investment market have their investments and savings safeguarded. The Board has actually included various security features in the computerised as well as the manual system to ensure that CPF savings withdrawn for investment purposes cannot be wrongfully withdrawn or siphoned off. All withdrawals of CPF savings for investments are channelled direct from the Board to the member's investment account with an agent bank without passing through the member's own bank account. This prevents the loss of CPF savings in transit. In addition, the computerised system checks the validity of all applications of withdrawal before the Board releases CPF savings into the investment account of a member.

Sir, shares bought with CPF savings are held in custody by the agent bank. They are not held by the CPF member. In addition, the shares must be registered in the name of the agent bank's nominee instead of the CPF member himself. This ensures that upon sale of the shares, the proceeds will be returned directly to the member's investment account instead of going to the member himself personally. All transactions are properly documented. In addition, the Board and the agent bank send regular statements to the member informing him of all his transactions of purchase or sale of shares authorised by him.

Sir, regular audits are also carried out to ensure that all procedures laid down by the CPF Board and the agent banks are complied with. As most of the transactions are computerised, the audits will also cover the computer system for handling such withdrawal and purchase of shares. With this safeguard, I think the security of members' CPF savings is quite well assured.