SINGAPORE BUSINESS FEDERATION (Mandatory membership)

Ms Indranee Rajah asked the Minister for Trade and Industry (a) why is there a need for local companies with a paid up share capital of S$500,000 or more and foreign companies with an authorised share capital of S$500,000 or more to be compelled by law to become members of the Singapore Business Federation and to pay subscription fees, and (b) why have they been deprived of the option to choose whether or not to become members of the said Federation.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, the establishment of the Singapore Business Federation with mandatory membership was proposed by the former Singapore Federation of Chambers of Commerce and Industry (SFCCI), as a new apex organisation to represent Singapore's business interests more effectively, both locally and abroad. In response to SFCCI's recommendation and after many months of consultation with members of the local and international business community in Singapore, the Government introduced the Singapore Business Federation Bill, providing for mandatory membership of the SBF of all local companies with a paid-up capital of $0.5 million and above, and foreign companies with an authorised capital of $0.5 million and above. The Bill was passed by this House in October last year, and the SBF was formed in April this year.

I explained to this House last year during the debate on the SBF Bill that we supported SFCCI's recommendation that membership of the SBF should be mandatory as the earlier practice of voluntary membership by business chambers and associations had not been effective. The business community had remained fragmented despite our best efforts, and lacked a strong and united private sector umbrella organisation. Compulsory membership would ensure that the SBF has a strong membership base, and has the mandate of the entire business community.

Compulsory membership of business chambers can also be found in other countries. In France, Germany and Brazil, for example, chambers of commerce have legislative rights to collect fees from businesses. To ensure that this requirement will not be unduly onerous on our companies, we have exempted small companies, partnerships and sole proprietorships from having to join and contribute to the SBF. Hence, only local companies with paid-up capital and foreign companies with authorised capital of $0.5 million and above are required to be members of the SBF.

We use paid-up capital because it is a simple criterion and generally correlated with size. MTI, together with the pro-tem committee of the SBF, did consider other criteria like profitability, annual turnover and employment size, but came to the conclusion that, whatever criterion or set of criteria we used, there would be difficulties wherever the line was drawn. In the end, we decided on paid-up capital as the simplest and least contentious criterion. Recognising, however, that exemptions may be clearly justified based on this criterion, the Act enables the Minister to allow them. To date, SBF has preferred not to recommend any exempted category because such exemption might cause many others not exempted to feel that they too should be exempted. As the SBF has only recently been formed, it is still collecting feedback. If SBF decides that there should be exemptions based on clear criteria and recommends them to me, I will consider them carefully.

Ms Indranee Rajah (Tanjong Pagar): What would be the position with regard to companies which are not trading, for example, investment holding companies? Would this be an appropriate category for an exemption?

BG George Yong-Boon Yeo: I would prefer that such feedback be given to SBF and for SBF to look at the full implications and then put up its recommendations to me. I should not go behind the SBF to second guess what its recommendations should be.

Mr Leong Horn Kee (Bishan-Toa Payoh): Sir, I would like to ask the Minister to consider that for companies which have a paid-up capital of $500,000, but actually became defunct or dormant because their business dealings are no more active, should be exempted from paying subscription fees.

BG George Yong-Boon Yeo: Sir, if these companies are de-registered, then, obviously, the compulsory membership will not apply.

Mr Leong Horn Kee: These companies may not have been de-registered, but they are active companies with no real trading or activities going on. They are just dormant companies.

BG George Yong-Boon Yeo: Sir, it is not easy to establish criteria for dormancy. But if such criterion can be established and the dormant status incontrovertibly defined, then I am sure SBF would recommend these companies to me, and I will consider them appropriately.