GUARANTEE FOR INDONESIAN IMPORTS (APPROVAL BY PRESIDENT)

Mr Simon S C Tay asked the Prime Minister, as regards the proposal discussed with President Suharto of Indonesia for guarantees to facilitate Indonesian imports, whether the Government intends to seek the approval of the President of the Republic of Singapore for any guarantee that Singapore may give.

BG Lee Hsien Loong: Mr Speaker, Sir, as I explained just now, the trade guarantee facility will proceed only if enough countries agree to participate. Provided they do so, MAS will pledge US$2 billion towards the Indonesian trade finance guarantee facility. The fund will come from Singapore's earlier US$5 billion contribution towards the IMF second-line financing package for Indonesia, which so far has not been drawn upon.

Guarantees under the proposed facility will be given by MAS. MAS has the authority to extend such guarantees under section 23(1)(k) of the MAS Act. The contingent liability posed by the guarantees will not draw on the reserves that MAS has accumulated prior to the current term of office of Government which began on 25th January 1997. This is because MAS has, during the term of office of government, accumulated reserves well in excess of the US$2 billion for the guarantee facility.

Since there will not be a draw on past reserves, the Attorney-General has advised that there is no need to seek the President's approval for the guarantee facility under Articles 22B(6) and 22B(7) of the Constitution.