TRUST FUNDS

Column: 24

TRUST FUNDS: 5.

Mrs Fang Ai Lian asked the Deputy Prime Minister and Minister for Finance what has been the progress in (a) implementing the Economic Review Committee's proposals to promote the business of trust funds management in Singapore and (b) updating the relevant statutes governing trust and tax regulations in Singapore.

Mr Lee Hsien Loong: Mr Speaker, Sir, as part of our effort to develop Singapore into an attractive international trust domicile, various legislative and administrative refinements are in the works.

The Trustees Act is currently being reviewed and the updated legislation is expected to be passed in mid-2004. The Trustees Act was enacted in 1967. It was based on the UK Trustees Act of 1925, but unlike the UK, US and Canada, which have made significant changes to their trust laws, we have not made any major changes to modernise our Act. MAS and the Ministry of Finance are currently reviewing the Trust Companies Act, and the updated legislation is scheduled to come into force in the second half of 2004. MAS will also take over the administration of the Trust Companies Act from the Registry of Companies and Businesses.

As part of our efforts to improve the business environment for the trust industry, we had, in Budget 2003, extended the income tax exemption for foreign trusts administered by Approved Trustee Companies to include foreign trusts administered by any trust company in Singapore.

Mrs Lim Hwee Hua (Marine Parade): Sir, in updating the relevant legislation, what would the Deputy Prime Minister's

Column: 25

approach be in terms of balancing the need to protect the unit holders of these new instruments as well as ensuring that the new instruments will have a fair chance of being viable and attractive?

Mr Lee Hsien Loong: Mr Speaker, Sir, we have been taking soundings in the industry very extensively. We have consulted the practitioners, lawyers, as well as private wealth managers, private bankers, and we are taking inputs from the public too. So, it is a balance to make sure that the rules are fair and, at the same time, the instruments are attractive and viable and will be able to take off. I think with REITs, we have struck a good balance. We have had quite a number of successful REITs listed in Singapore and we will try to do the same for the other changes.