POSTAL SERVICES BILL

Order for Second Reading read.

The Minister of State for Communications and Information Technology (Mr Lim Swee Say): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Bill before this House provides for the regulation of the postal services sector in Singapore. Like the Telecommunications Bill 1999 that was debated earlier in this House, the Postal Services Bill repeals and re-enacts substantively the provisions of the Telecommunications Authority of Singapore (TAS) Act on the licensing and regulatory powers in postal services. Clause 3 of the Bill provides for the appointment by the Minister of any person to be a Postal Authority. The intention is to appoint the new Info-communications Development Authority of Singapore (IDA) as the Postal Authority.

Sir, the postal services sector comprises two broad categories - the basic delivery of ordinary letters and postcards, and the delivery of express letters. The latter is a premium service. To meet the needs of the business consumers for secure and fast delivery service, the express letter market has been liberalised since February 1995. This provides consumers with a wider choice of competitive carriers for their time-sensitive and more secured express mails.

For the delivery of ordinary letters and postcards, Singapore Post has the monopoly rights until 31st March 2007. Members of this House may ask why not bring forward the liberalisation of this market so that the benefits of competition, such as competitive pricing and higher service levels, can be enjoyed earlier. After all, this was what we did for the telecommunications sector.

Sir, we must weigh the possible benefits of liberalisation against the cost of advancing liberalisation with its concomitant compensation and decide what is the best approach. In the postal industry, the key growth areas are the delivery of express letters and direct mails from businesses to households, such as printed matters, advertising materials and publications. These growth areas have all been liberalised. SingPost's monopoly is restricted to a low-growth market of ordinary mails and postcards. In 1998, the volume of ordinary letters and postcards has decreased by 4.5% and is expected to decrease by a further 2.2% in 1999. Looking ahead, this declining trend is expected to continue over the next few years, with the increasing use of mail substitutes such as e-mails and faxes. This is clearly unlike the rapidly expanding telecommunications sector, where the potential benefits of advancing liberalisation are obvious. The postal industry relies on the high volume of mails to achieve economies of scale. This has allowed the postage for ordinary local letters to be kept at an affordable rate of 22 cents. Without the benefits of the economies of scale, postage rates may have to go up.

Currently, TAS sets the minimum standards for the quality of service that SingPost should provide to the public for the delivery of ordinary letters and postcards. This includes targets for delivery speeds of local, registered and international mail, and queuing time at postal outlets. For local ordinary mail posted before 7 pm within the CBD or 5 pm outside the CBD, TAS requires SingPost to deliver by the next day at least 98% of all mails within the CBD and 95% of mails outside the CBD. There are both internal and independent external audit checks to ensure that these standards are met. It is also necessary to review these standards regularly to continuously improve the overall postal service enjoyed by Singaporeans. In this regard, IDA, in its capacity as the Postal Authority, aims to raise the minimum standards for quality of service for next day delivery of local ordinary mails that are delivered outside the CBD from 95% today to 98%, and for those that are delivered within the CBD from 98% to 99%. This will be implemented progressively over the next few years and will be completed by 2004.

Sir, TAS has also put in place a price control regulatory framework, which benchmarks the tariffs for our basic postal services against countries with similar cost structures. For the delivery of ordinary letters and postcards, TAS requires SingPost's charges to be below the average of these countries. SingPost also needs to seek TAS' approval on any tariff changes for its basic services. The price control framework ensures that the tariffs for our basic postal services are internationally competitive.

So, for SingPost's delivery of ordinary letters and postcards, there are sufficient safeguards on service levels and prices to protect the interests of the general public. We will therefore not advance the liberalisation of the ordinary letter market.

What we will do is to ensure that the regulatory framework is fair and transparent. In the Bill, the provisions outlining the regulatory approach mirror closely those in the Telecommunications Bill 1999. The IDA, in its role as the Postal Authority, will similarly rely on licence conditions, directions, codes of practice and standards of performance. This is provided for in clauses 6, 24 and 25 of the Bill. Likewise, clause 26 provides for the Postal Authority to issue advisory guidelines.

Apart from the cancellation or suspension of a licence, clause 9 also provides for a financial penalty to be imposed on postal licensees that do not comply with these regulatory requirements. Compared to the telecommunications and public utilities sectors, the potential public impact of a breach of regulatory requirements is less serious in the postal sector. The maximum amount of the financial penalty is thus set at $10,000.

In addition, clause 56 contains explicit provisions allowing licensees the recourse to appeal to the Minister against any decision of the Postal Authority in the exercise of any discretion vested in it by the Act or anything contained in a code of practice of standard of performance.

Sir, the Postal Services Bill 1999 sets out the regulatory framework for the postal industry. Notwithstanding the monopoly in the delivery of ordinary letters and postcards, we do enjoy high quality of service at internationally competitive prices. To ensure that we continue to do so, we will review the minimum standards for the quality of service and the price control framework regularly.

Sir, I beg to move.

Question proposed.

Assoc. Prof. Toh See Kiat: Mr Speaker, Sir, I rise to support this Bill.

Firstly, let me mention that under clause 2 of the Postal Services Bill, there is a definition of "letter". I would like to clarify if such a definition would include services that the Singapore Post is currently promoting, which is the V-post and perhaps even e-mail services, because if this is not within the definition of "letter" in clause 2, there are certain other implications.

Secondly, on clause 2, at the risk of sounding like a broken record, I would like to put on record for the Hansard because this would aid in future interpretation of this Act, this question of the definition of "TAS". I just need to clarify that after this Bill is passed today, there will be no new TAS that will be "reconstituted".

Thirdly, clause 4 deals with the monopoly, that is, the exclusive privilege that the postal licensee would have. On first reading of this clause, I initially was disappointed because my first reaction was - what has happened to the liberalisation of postal services that we have been promoting and advocating, because if postal services are liberalised, sometimes this would be more business-responsive. And indeed, the growth of the courier business has shown that to be so. I am therefore glad that the Minister of State has actually clarified in his speech that there are certain residual areas of the postal service which would be unattractive to the commercial sector to carry and yet they need to be carried because people need to correspond, and economies of scale are needed so that it would be affordable enough at 22 cents. I thank the Minister for that. At 22 cents, it is a bargain deal and, on top of that, there is quality of service standard requirements by the current TAS and, later on, IDA. I would therefore support this and urge for constant review of this need to liberalise postal services even more. Ultimately, if postal services are not relevant, we should look into making it more responsive to the times and the technologies.

Clause 5 deals with letters or postcards which accompany goods. I believe the intention really is that there are certain correspondences that do not really relate to the ordinary letter that we are talking about. This is something that goes along with the delivery of goods and the provision in clause 5 says that if this is accompanied by a "Consignee's letter" then this is not covered by the exclusive privilege. My question, Sir, is that, sometimes some of these cards or covering letters might accompany a delivery of goods, but it is not a trade practice or industry practice to call this letter a "Consignee's letter". And if that is so, then the deliverer of these goods would be breaching the Act if he were to deliver the goods with that letter. It is particularly so when we talk about the e-commerce purchase. The transaction is entered into on the Net. Somebody must physically deliver and perhaps with a covering letter. I hope these delivery services are not covered by the exclusive privilege or the monopoly of the licensee.

Sir, I move on to clause 15. Clause 15 raises a concern. It says that, "The addressee of any postal article containing any dutiable goods shall be presumed until the contrary is proved to have imported the same". Sir, this is an evidential presumption which gives the State ease in prosecuting illegal imports and so on. But I would be very concerned that this does not get seen as a kind of indirect import tax on e-commerce because an e-commerce transaction is entered on the Net and something is delivered, and it could be delivered from Amazon.com in America. We do not want to see any indirect import taxes imposed on transactions like that because then e-commerce would be hampered.

Next, clause 19. Clause 19 describes essentially what a postage stamp is and what are the protections that are needed to make sure that postage stamps, especially philatelic stamps, are valuable and continue to be valuable. The words "postage stamp" are defined again in clause 2, but reading it together with clause 19, I get the impression that it may not cover the development of e-postage stamps on the Internet. There are many, many proposals for this now and the idea essentially is that on the Internet, you could order a stamp that you can then fix onto your e-mail or to your physical mail and deliver. Such stamps would not have artwork probably. There will definitely not be any printing proofs, no dyes or artifacts will be created and they may not even have adhesive or be printed or stamped directly on the postal article itself. This whole section seems to describe, if you might say, Sir, obsolete technology. I hope that the Minister could look into this and clarify that this does not stop any development in the e-postage stamp category.

Finally, clause 28. Clause 28 of the Bill deals with the damage to the installation or plants used for posts and it covers essentially what the old section 77 of the TAS Act deals with, and that is, you cannot intercept the transmission or delivery of a postal article if you were to touch, tamper, remove or damage the installation or plant of the postal services and the postal licensee. I have mentioned this during the debate on the Telecommunications Bill and I want to mention the same point here that in the era of e-commerce, we have to increasingly assure consumers and businessmen that when they go to e-commerce, it does not mean that they will lose all their privacy and it is important that we look at making sure our laws do cover this unauthorised interception of messages and letters and telecommunications.

Under this clause, I think that it is not wide enough to cover a situation where if the postman has delivered into a private mailbox. It is no longer a plant of SingPost - and that private mailbox is opened and somebody reads the letter, seals it and puts it back again. And that is not illegal because under this current definition, no plant or installation of SingPost has been touched. I would prefer that to be not so, because we must protect private mail all the way until it is received and read by the addressee himself. If you were to look at it harder, I am concerned that it may not cover a situation where currently SingPost, for example, uses part-timers. Many of them are housewives and they help to deliver the mail. And sometimes they may actually be using paper bags or shopping bags that may not be SingPost's plant or equipment. I am concerned that this would then escape the penalty provisions of clause 28 and I do hope that the clause is not meant to be taken so absurdly and narrowly. If the Minister could clarify that, I would be most obliged.

Sir, I support the Bill.

Mr Lim Swee Say: Sir, I would like to thank Prof. Toh See Kiat for his constructive comments.

Firstly, on the point about V-post and e-mail services, I would like to clarify that this Bill basically deals with the physical delivery of letters and postcards. For e-mails and so on, it does not come under this Bill. E-mails would be covered under the Telecommunications Bill.

Secondly, on Prof. Toh's point about the "reconstituted" TAS, as my Minister has mentioned earlier, we would check with the Attorney-General again.

Prof. Toh also spoke on clause 4 regarding exclusive privilege. I want to assure the Member that the exclusive privilege here refers to the privilege given to the Postal Authority, in this particular case, the IDA. The IDA can issue licences for sectors that are deregulated. As I mentioned earlier, for the high-growth sector, we have already deregulated the market. In fact, at this moment, there are 110 companies competing with SingPost in the deregulated segment.

On clause 5, Dr Toh asked what happens if the letter does not have the "Consignee's letter" stamp on it. My understanding is that, as long as the letters or postcards in question concern solely any goods or property to be delivered, and do not serve other purposes, these will be exempted under the Act.

Prof. Toh mentioned the presumption on imposition of an indirect import tax in clause 15. I would like to clarify that what this Bill does is to make clear that the addressee is presumed under the law to be the importer of the goods. Whether he has to pay duties directly or indirectly, that will be covered under the Customs and Excise Act, and not under this Bill.

Prof. Toh mentioned clause 19 regarding e-postage stamp. Again, this Bill covers only the physical delivery of letters. So e-mails and e-postage come under a separate Act, which is the Telecommunications Act.

On clause 28 regarding the unlawful interception of letters, basically, this clause covers the protection of installation and plant. If a person were to retain any letters illegally and unlawfully, this would be covered under clause 36. If an employee were to do something wrong with the letters, whether he is a part-timer or full-timer, this will be covered under clause 34.

Sir, with that, I believe I have addressed the concerns expressed by Prof. Toh. Once again, I thank him for his support.

Assoc. Prof. Toh See Kiat: Sir, I would like to ask the Minister of State a question on clauses 34 and 36. These clauses relate to retention. But my scenario is one where a person opens up a letter, reads whatever he needs to read, and then seals it and puts it back into the mailbox. Then there is no offence and I think this is an anomaly, Sir.

Mr Lim Swee Say: Sir, clause 36 says, "Any person who . wilfully retains or secretes or makes away with or keeps or detains ..". My understanding is that even if a person were to retain the letter for a short time, that could, in a way, be covered under this clause. But I am not a legal expert and I think we will leave it to the court of law to interpret this particular sentence.

Assoc. Prof. Toh See Kiat: Sir, in other words, the Minister of State says that it is the intention of Parliament that even those few seconds of retention is sufficient under the Bill to constitute an offence.

Mr Lim Swee Say: Sir, as I have mentioned, the Bill states quite clearly that "any person who wilfully retains .". So for a few seconds, I think it would constitute retention. As I said, I am not a legal expert and I think the court of law would do the interpretation. If it turns out to be different from the intention of the Act, then we have to clarify and amend the Act.

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 Swee Say].

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