CENTRAL PROVIDENT FUND (AMENDMENT) BILL

[Mr Speaker in the Chair]

Debate resumed.

Dr Ong Seh Hong (Aljunied): Mr Speaker, Sir, thank you for allowing me to speak on this CPF (Amendment) Bill.

I rise to express my concern on the unfair penalty that will be imposed on the HDB flat buyers when the sellers default on payment of the charge due to the CPF Board after the amendment comes into place. Specifically, I refer to the changes to the Act, which empower the Board to sell the flat and recover its dues.

Let me illustrate my point with an example. Suppose a Mr Ong has decided to buy a HDB flat from a Mr Tan. They agree on a price and Mr Ong duly paid up the amount to Mr Tan either by cash, his CPF or a loan. Thereafter, one would expect that Mr Ong would be able to move into his dream flat with peace of mind. However, after the amendment comes into force, things might not be so straightforward anymore for Mr Ong. Should Mr Tan decide to pocket the money and he does not repay the charge due to the CPF Board, Mr Ong would be in deep trouble.

Why? Because with the amended legislation, the Board would come after Mr Ong for the flat, never mind that Mr Ong is not the person who defaults the payment. After 60 days on expiry of the due date of the payment to CPF Board, the Board would put up a notice of sale to declare its intention to sell the flat. Another 90 days have lapsed and if Mr Tan still does not pay up, the Board would go ahead and sell the flat and recover whatever charges due to CPF Board. As a result, Mr Ong, the buyer, who has paid for the flat would lose his flat while Mr Tan, the culprit, would get away. An analogy is like when you are going to a shop to buy a packet of rice, but because the shopowner did not pay up the supplier, the supplier comes after you to take away your packet of rice to recover the debt which is owed by the shop.

This is very unfair to the buyers, Mr Speaker, Sir. I wonder if the Ministry, as the Chinese saying goes, has become "hei bai bu fen" ( ), which means unable to differentiate the white from the black. Or if the Ministry simply takes the easy way out, yes, the Board can just take the flat back, sell it, recover the charges due to itself and leave the buyers to sort out the mess with the sellers.

Mr Speaker, Sir, there is another Chinese saying, "yuan you tou, zhai you zhu" ( ), which literally means there is a culprit to every wrongdoing and there is a debtor to every debt. It means that we must go after the real culprit responsible for any wrongdoing and we must not "yuan wang hao ren" ( ), that is, we must not wrong the innocent people.

Therefore, Mr Speaker, Sir, while I support the other amendments in the Bill, I would like to urge the Ministry to rethink this particular amendment. Instead of empowering the Board to sell the HDB flat involved, I would like to suggest that the CPF Board be empowered to impose a severe penalty on the members who default on the charges due to the Board. For example, defaulters, like Mr Tan in my illustration, could be fined a hefty sum several times the amount due and, in some instances, be imprisoned.

I certainly hope that the Ministry would not reply by saying that those buyers affected could take action against their lawyers for negligence or take out a civil suit against the sellers. Is that not a very convoluted way of solving a simple problem? In the first place, it is already wrong to ask them to assume the responsibilities of the seller's wrongdoing. Now, you want to impose further burden on these innocent victims who, after losing their flats, have to incur extra legal expenses and time, not to mention the mental anguish they have to go through. Since we know that this amendment is unfair and unjust, I feel that we should take the corrective action now.

Mr Speaker, Sir, our law is to protect the law-abiding citizens and to hold wrongdoers responsible for their misdeeds. This particular provision has contradicted that spirit. Therefore, I strongly urge that this part of the amendment be reviewed and changed. The CPF Board must take action against the culprits and not take the easy option of penalising the innocent victims while leaving them in the lurch.

Dr Ng Eng Hen: Mr Speaker, Sir, I thank Mr Yeo and Dr Ong for their comments. Let me reply specifically to some of their points.

Mr Yeo Guat Kwang has advised the public at large to exercise prudence in making housing plans. And we reiterate this call for home buyers to acquire homes within their financial means. He asked what CPF Board and Government can do to educate Singaporeans to better plan their finances, including consumption and investment in housing. I would like to remind the House and the public that this is exactly what the imposition of the valuation limit, in terms of CPF withdrawal limit, seeks to do. It will start at 150% and slowly move over the next five years to 120%. Similarly, the cash payments will increase from 0% to 10%.

Mr Yeo also talked about the CPF default rate and e-submissions, in particular, he mentioned that it was 0.6% in April-June up to 0.8% in January-March. Mr Speaker, Sir, I think these are quite highly commendable figures. We have less than 1% of employers defaulting. Statistically, it is not different. There is a quirk that in the month of February, there seems to be a slight blip, perhaps related to the Chinese New Year season. But, yes, we will do our utmost to reduce the default rate further. Our CPF Board does contact employers fairly quick after they have gone beyond a two-week limit.

He also asked about small and medium enterprises and how we can help them to enable them to submit CPF submissions electronically. Yes, the Ministry will roll out the plan. Currently, about less than 10% do so. We will extend the same programmes that we do for large employers to smaller employers, including subsidising some of their transmission fees electronically. We will also create additional e-channels for e-submissions which include the use of major kiosk service providers. The AXS employer returns, for example, currently utilises 150 kiosks for goods island wide. They can also have access to sites in CDCs and CCCs as well as, he mentioned, GIRO. And, yes, there are plans to also start e-lobbies, or e-terminals within the lobbies at CPF branches. We will roll out special training plans for these small employers, including using the Government IT Literacy Programme to co-fund part of the enabling process.

Let me now touch on the point brought up by Dr Ong where he mentioned that this amendment is unfair against the seller. I would like to remind him that this provision already exists for private properties. It is no different from that of private properties. The only difference is that now we create an automatic charge. So the solution really is that you still need to enable the CPF Board to acquire the properties with the power of sale. Because in certain acts of collusion between buyer and seller, you need the Act. The solution to prevent the CPF Board exercising the power of sale is to ensure that there is due diligence.

We will make arrangements, in the event that HDB is the intermediary and where HDB is appointed as a solicitor for either buyer or seller of the flat to ensure that the CPF funds have been returned. In addition, banks and lawyers will be informed of the CPF charge and the power of sale that comes with it so that they will do their diligence. They will conduct search at the CPF Board and the existence of the CPF charge on the HDB flat. It will be in the interest of the banks to ensure that the CPF charge is this charge from the sale of the flat so that there is no encumbrance on the flat. The buyer's lawyer should ensure that the title to the flat is passed to their client free from prior encumbrance and the seller's lawyer should also ensure that their client returns the CPF as otherwise the sale could be jeopardised, should CPF invoke its power of sale.

In the unlikely event that the above mechanisms fail and the CPF monies secured by the CPF charge are not paid, the CPF Board will still seek the assistance of HDB, the mortgagees and the parties' lawyers to recover the CPF monies from the sellers. With due diligence from all parties involved, this power will rarely be invoked and, indeed, only as a last resort, such as instances when there is evidence of collusion between the buyers or sellers, will CPF Board proceed to sell the flat to recover the seller's CPF money that is secured by the charge.

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 Ng Eng Hen].

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