GOVERNMENT SECURITIES (AMENDMENT) BILL

Order for Second Reading read.

The Second Minister for Finance (Mr Lim Hng Kiang): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill before the House seeks to amend the Government Securities Act (GSA) to allow the Government to issue Government securities with early redemption features.

In October 2001, the Government set up the New Singapore Shares (NSS) Fund to issue NSS to Singapore citizens. The intention was for the NSS Fund to invest in Special Singapore Government Securities. As NSS holders can withdraw the shares any time they wish before they mature in 2007, an early redemption feature is required for the Special Singapore Government Securities issued to the NSS Fund, so that they can match the early encashment of NSS. The GSA currently does not allow for the issuance of securities with early redemption features. All issues of Singapore Government Securities today carry a pre-specified interest rate and a pre-specified maturity period. Trying to match the early redemption cash requirements of the NSS with fixed maturity Singapore Government Securities introduces unnecessary complications and uncertainties.

Mr Speaker, Sir, I shall now proceed to explain the key provisions of the Bill, which are:

(1) Clause 2: Payment of Interest

Clause 2 amends section 23 of the GSA to allow the payment of a portion of the half-yearly interest on Government securities when any Government security that is redeemable at any time and at the election of the holder is redeemed before its maturity. The interest will be calculated on a pro-rata basis.

(2) Clause 3: Redemption of Government Securities

Clause 3 amends section 24 of the GSA to provide for the redemption of the new class of Government securities. The amendment provides that these Government securities are redeemable at par on their maturity date or the redemption date specified by the holder in the notice of intention to redeem, whichever is earlier.

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. - [Mr Lim Hng Kiang].

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