CURRENCY (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill before the House principally focuses on the repeal of the provision in the Currency Act which currently imposes strict controls on the existence of full colour copying machines in Singapore. Apart from this major amendment, opportunity is also taken to incorporate 16 other amendments to improve and update practices and procedures of the Board of Commissioners of Currency of Singapore (BCCS).

Clause 13: Lifting of Controls over Colour Copiers

Clause 13 of the Bill seeks to repeal the existing provision on the controls of colour copiers governed by section 20A of the Currency Act and the Currency (Full Copying Machines) Regulations of 1996. These statutes require a permit for the use of colour copiers, as well as a counterfeit prevention system (CPS) to be fitted in every such machine licensed for use in Singapore. Controls on colour copiers had been put in place since 1979 to combat counterfeit activity. They were enhanced in 1995 when currency counterfeits made by even low-end colour copiers were found to be good enough to be passed off as real currency. However, with rapid advances in technology, a drastic reduction in the cost of producing colour copiers, and therefore the widespread availability of these colour copiers worldwide, the Government has acknowledged that our controls on colour copiers are becoming increasingly onerous and impractical, and cannot be expected to be water-tight.

Therefore, instead of seeking to continue strong and direct controls which disadvantage Singaporeans and inhibit industry players, especially those based in Singapore, we have chosen instead to speed up the development of a new Portrait series of Singapore currency notes that are more resistant to counterfeiting via colour copiers. BCCS will be issuing the new Portrait Series incorporating the latest anti-colour copier and anti-scanner security features, including the Common Mark System (CMS) in 1999. The CMS is designed to distort the image of any attempted colour photocopies of these notes.

It is timely for the existing controls of colour copiers to be lifted. The main beneficiaries would be Singaporeans, who will now have wider access to full colour copiers, and the business community, not only users but also manufacturers trying to create a mass market for low-cost colour copiers.

The other proposed amendments to the Currency Act are to improve the practices and procedures of the BCCS. I will now bring the House through the main amendments.

Clauses 4 and 5: Board Appointment

Clause 4 seeks to amend section 6 of the Act to clarify that all members of the Board, including the Chairman and Deputy Chairman, shall be appointed for a specific period not exceeding three years and shall be eligible for re-appointment. The proposed amendment is made in view of the provision since 1991 that the post of Chairman, BCCS, is no longer held automatically by the Minister for Finance, hence the need to specify the duration of the Chairman's appointment. Clause 5 extends the general disqualification provision in section 8(1) of the Currency Act to apply to all members of the Board, including the Chairman.

Clause 12: Provision on Currency Reproduction

Clause 12 seeks to amend section 20(1) and (2) to clarify and extend the restriction on the use of photographs, drawings or designs of Singapore currency notes and coins. The clause also seeks to enable BCCS to impose conditions in granting permission on the use of these photographs, drawings or design of currency notes and coins. The effect would be that selected manufacturers and others who have been licensed to use Singapore currency note or coin design for souvenirs, merchandise, etc, could have their licences rescinded by BCCS should they fail to comply with the conditions specified in the licences.

[Mr Deputy Speaker in the Chair]

5.40 pm

The Minister for Finance (Dr Richard Hu Tsu Tau): Clauses 14 and 18: Currency Fund and Liquidity Requirements

Clause 14 amends section 21(5) to remove the percentage of 30% of the Currency Fund which must be held in liquid portion. This specification is considered unnecessary as currently, the liquid portion can be varied with the unanimous approval of the Board.

Clause 14 also seeks to delete section 21(6) which defines the list of assets previously deemed to be liquid, such as gold, silver, foreign exchange and Government guaranteed securities maturing in less than two years. The amendment brings the Act up to date with current developments in the financial landscape, in which liquidity is no longer static or quantifiable concept, given that the ease with which investments are liquidated would differ under varying circumstances. The proposed amendment will accord the Board greater flexibility in maintaining adequate liquidity in the Currency Fund to meet demand.

Clause 15: External Assets

Clause 15 seeks to amend section 22 to specify three other types of external assets in the Currency Fund, namely, equities, corporate bonds, and currency and financial futures. This amendment makes it clear in the legislation the inclusion of the three additional external assets which have already been approved by the President.

The other amendments are of a drafting nature to rectify inconsistencies, and clarify provisions where there have been difficulties in interpretation.

Sir, I beg to move.

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. - [Dr Richard Hu Tsu Tau].

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