HEAD R - MINISTRY OF LAW

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Head R - Ministry of Law

The Chairman: Head R - Ministry of Law. Amendment No. (1), Ms Indranee Rajah.

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Arbitration Hub

Ms Indranee Rajah (Tanjong Pagar): Sir, I beg to move,

That the total sum to be allocated for Head R of the Estimates be reduced by $100.

I would like, if I may, to comment on the topic of arbitration and Singapore as an arbitration hub. Arbitration is different from litigation in the following way. Litigation is a mode of dispute resolution in the court system. Arbitration, on the other hand, is a private, consensual mode of dispute resolution. The difference between arbitration and litigation is that in arbitration, you can choose your judge, you can choose your counsel, you can choose your law and, most importantly, it is private, which means that confidentiality is preserved. This makes arbitration a particularly suitable mode of dispute resolution for regional disputes where, for whatever reason, parties do not feel comfortable taking their disputes to the court of their relevant country. In most cases, it is usually because they wish to preserve confidentiality, and court proceedings, of course, are public proceedings.

I feel that Singapore has not realised its full potential to be an arbitration hub in the region and that there is a lot of room for growth for arbitration services in Singapore. It is true that we have made headway since the setting up of the Singapore International Arbitration Centre (SIAC) and the cases have been steadily growing. In 1997, I believe the number of cases was around the region of 57 or 58. For the past four years, it has been between 82-83. But in the past few years, the numbers have plateaued off, and I think that we have a lot more potential for growth.

Singapore is actually uniquely poised to be the arbitration hub for the region. And I would like to highlight three or four

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points which I think are our greatest strengths, and these are actually intangible in nature.

The first point is that Singapore is able to deliver neutral justice, and this is very important because parties, and in particular foreign investors, want to be sure that their disputes are resolved without fear of bias or corruption. At the same time, if a person is a foreign investor from an Asian country, he may not be comfortable to arbitrate in his Asian country. And vice versa, the Asian investor may not be comfortable to arbitration in the western countries, because of homeground advantage. Singapore, on the other hand, has a reputation for being neutral and having good infrastructure for legal services. So that is one strength.

The second strength is the high quality of the jurisprudence and legal services available in Singapore.

The third strength is the wide choice of counsel that is available to parties. With the recent amendments to the Arbitration Act to make it quite clear that foreign counsel can arbitrate in Singapore, even on Singapore law contracts. Effectively, what it means is that any disputant who wishes to arbitrate in Singapore has a choice of all law firms in the world to represent him.

Finally, I would like to espouse, if you like, the advantages of Singapore law as a governing law. You do not need to have a contract governed by Singapore law in order to arbitrate here. But Singapore law has this unique advantage. It is almost exactly the same as English commercial law which makes it acceptable to westerners. But, on the other hand, it is also the law of an independent and sovereign Asian republic, which makes it acceptable to Asian countries. Because of that uniqueness, it has a certain attractiveness to people when they want

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to invest in the region, as a law that can satisfy both parties.

Sir, I hope that the relevant Ministries, not just Ministry of Law but all the other agencies that promote Singapore law, such as MTI, EDB or even the Singapore Business Federation to which the SIAC reports, will bear this in mind and use this as a tool for marketing Singapore law.

I also think that in order to develop our services better, it would be helpful if we had better transcription and translation services which, at the moment, we do not have. And also if the hotel industry could play a part in providing better Internet facilities, secretarial services as well as other infrastructure to promote arbitration.

The Chairman: Mr Ahmad Khalis, you have two cuts. You can take them together.

Alternative Dispute Resolution

Mr Ahmad Khalis Bin Abdul Ghani (Hong Kah): Sir, Alternative Dispute Resolution (ADR) has been widely used in our courts as part of the legal process. It has developed in sophistication and many would say in importance for the last 10 years. It is a process whereby in the midst of a legal process in court, the matter is transferred to a parallel track where the court and the parties attempt to resolve the matter via mediation instead of litigation. If this process fails, then the matter is restored back to its original litigation track. The question is: how effective has the ADR been? Has the ADR actually increased cost of the parties, since mediation can sometimes be quite circuitous whereas litigation offers more certainty, especially in terms of time? Can the Minister enlighten us on the success rate of ADR?

Based on its performance so far, what is the future of the ADR? If it has been proven successful, are there plans to

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expand in scope? For instance, in cases where parties have smaller claims size, the Small Claims Tribunal does not have jurisdiction to hear certain cases, eg, those that may involve complex legal issues such as those found in hire purchase or property disputes. Such disputes usually remain unresolved. If parties bring them to the Subordinate Courts, they will be subject to the usual legal costs, which are too costly compared to the amount of claim. Yet, the amount in dispute, say, $12,000 is not small when the average pay of the party concerned is about $2,000 per month. So, is the Ministry considering ways to plug this gap by introducing an ADR type of mechanism for small claims which are currently outside the purview of the Small Claims Tribunal? I believe that as we position ourselves as an international centre for arbitration and mediation, we should also enhance access to justice for our local citizens as well.

Insolvency

On insolvency, we know that since the onset of the economic crisis followed by a string of devastating events, the number of people made bankrupt has increased. How does the IPTO respond to the significant rise of bankruptcy cases in recent years? Are there extra measures taken to enable bankrupts to be discharged and to facilitate practical early settlements? Statistics show that in 2004, about 50% of those made bankrupt were discharged by the fifth year. About one-fifth of these were discharged by the third year.

Some creditors have been heard complaining that debtors were abusing the bankruptcy mechanism. I would like to ask the Minister whether this complaint is valid. I would also like to ask whether the IPTO is able to identify such abuses, if any, from those who are genuinely unable to pay. And, if so, how does IPTO handle these abuses?

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Looked at from another point, how effective is our bankruptcy mechanism in helping to get debtors back on their feet again? There are those who burnt their fingers, hands, sometimes even their arms, due to the plummeting property prices or genuine business failures. Their debts may run into six or seven figures. Having no money now, they cannot reasonably be expected to repay much. Are they constrained by our insolvency regime from starting life afresh? Are the present criteria for discharge too stringent for them?

Bankruptcy is a very severe form of legal enforcement. In the case of companies, either party can apply for judicial management. It is a stage before winding up. It allows the debtor company to be managed by a professional third party. This helps the creditor in that it secures the assets of the debtor company from being unfairly dissipated. At the same time, if done well, it saves the debtor company from being placed under liquidation. I would like to ask the Minister whether there are plans to introduce a similar half-way house for individuals.

There are credit counselling services at the moment. However, here, the arrangement has to be forged mutually and voluntarily. One party may just refuse to agree as there is no legal obligation to do so. Perhaps this half-way house mechanism could bridge this gap.

Bankruptcy Prevention

Mr Inderjit Singh (Ang Mo Kio): Sir, we are talking of Ministry of Law, but my focus is still on financing.

Sir, while cultural changes are taking a long time to happen, it is not easy to change the mindset among people to accept failures. But I think what we can do is to at least avoid people from being bankrupt in the first place. The general feedback I normally get is that the people,

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who were bankrupt before and came out of bankruptcy, find it very difficult to access to finance, whether it is banks or VCs, or even from their friends and families. The best thing that we can do is avoid bankruptcy in the first place.

Sir, I would like to suggest two things. First of all, the judicial management that Mr Ahmad Khalis talked about. While it is working, it is probably not effective enough. I would therefore like to suggest that we look at something like Chapter 11 in the US, where instead of judicial managers managing the process, we let the companies continue to manage because they know best how to operate their companies, even in times of difficulty. From what I understand, judicial managers have problems actually operating the company without getting the help of the management themselves. There are also onerous tasks put on judicial managers. For example, they have to take personal liability for any new debts that are incurred. So I think a Chapter 11 system may eliminate some of these problems and make it more effective in avoiding bankruptcy.

The second thing I am proposing is something akin to Chapter 13 in the US against something that Mr Ahmad Khalis talked about, ie, a similar mechanism to avoid bankruptcy for individuals. And if we can do that, the work may be a bit more onerous on the Ministry side, but we can at least help avoid bankruptcies so that businessmen could at least try to recover, take responsibility for managing their debts and also continue to do their businesses rather than to be made bankrupt. Because after they are made bankrupt, there is a tremendous difficulty in Singapore for any one of them to recover and to start a business again, unlike in the US or in other places which are more entrepreneurial.

Sir, I hope that the Minister will take these two suggestions into consideration.

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The Chairman: Dr Mohamad Maliki, you have two cuts. Take them together, please.

Dealing with Bankruptcies

The Parliamentary Secretary to the Minister for Health and Acting Minister for Community Development, Youth and Sports (Dr Mohamad Maliki Bin Osman): Sir, my first cut is on bankruptcies. I echo the points made by both Mr Ahmad Khalis and Mr Inderjit Singh.

Sir, we have heard much about the rising trend of personal bankruptcies over the last few years. The detailed effect of bankruptcy on the person and those around him is still relatively unknown, although anecdotal account suggests the reduction of self esteem, heightened marital discord and even marital dissolution. I have seen young people coming to see me and asking me for help to be declared bankrupt. These are those who are really at their wits' end, something that I had never expected before.

These are people who are younger than me. Yet, they choose bankruptcy as an option in terms of coping with the mountain of debts that they have incurred, and the relentless harassment from the creditors or debt collectors, not to mention the legal suits filed against them. Sir, yet, we can always say that they are responsible for their actions. They choose to take up those credits. They failed to exercise financial prudence. But what is worrying is that these people are getting into such a state at such a young age. Their days are often filled with glum and they have very little hope for their future. The future of their children is also at stake.

I would like to ask the Minister whether his Ministry has tracked the profile of these cases of personal bankruptcies. Also, is there a growing

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trend of individuals seeking to be declared bankrupt as a way of coping with unmanageable debts? I think we need to understand more about these bankruptcy cases and develop more upstream preventive programmes to ensure that the problem does not worsen, again on what Mr Inderjit Singh suggested earlier. There is much that we can do if we are able to identify this group which is at higher risk and possibly target intervention programmes that can subsequently be developed.

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I would also like to ask the Minister whether there are plans to develop programmes that will educate Singaporeans on the implications and effects of bankruptcies. In this regard, I would like to suggest that the education includes implications of bankruptcies on their assets that they have, especially, for example, their HDB flats if they take mortgage loans from commercial banks. Many may not be aware that they risk losing their flats if these flats are actually mortgaged to commercial banks.

Intellectual Property

Sir, my second cut is on intellectual property. The intellectual property laws were enacted recently to ensure that Singapore provides a competitive environment for innovativeness and for inventors, owners of ideas, to feel that ownership of original ideas and inventions is safe and protected. I wonder to what extent are Singaporeans aware of the new developments with regard to these new laws in relation to intellectual property (IP). I am concerned with the potential impact on the common man with regard to infringement of these laws, especially if many are unaware of what these laws actually mean to them.

Specifically, Sir, I would like to raise the issue of ensuring that consumers at

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home are aware of the extent to which they are infringing the new IP laws, for example, downloading music, etc, including what used to be done like taping programmes or movies off the television and, at times, make duplicates and perhaps share with other family members. Are Singaporeans aware that such acts are considered as infringements of the law? Distribution of duplicates is actually a violation of the IP laws.

More importantly, Sir, I wonder if the Ministry is aware of the current level of infringements that is happening in the private homes here. Many youngsters do many things on their PCs in the privacy of their own rooms. They may or may not know if they are actually infringing the laws, but, more importantly, it is for parents to be aware of these implications of the law as many of them are not aware of what their children are doing on their own PCs.

Sir, we do not want a situation, like in the case of illegal immigrants renting rooms, where older folks who rent out their rooms to these illegal immigrants without knowing that they are actually violating the law. We saw some of them being charged in court and some were actually sentenced to prison. We do not want to see parents being dragged to court because of their children's actions.

I would like to suggest to the Ministry to consider embarking on a public education programme to ensure that Singaporeans are made aware of the new laws, especially to assist parents in monitoring their children's activities to prevent the violation of these IP laws.

Second-tier Patenting System

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Sir, to foster and speed up innovative activities among new entre

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preneurs, we need among a host of other measures to provide intellectual property (IP) protection that is relatively inexpensive, less cumbersome and one that can accommodate inventions with short commercial life. This will help to promote and support the culture of innovation and enterprise and assist start-ups.

The current IP registration process is quite costly and ranges from about $30,000 to more than $100,000. This cost is prohibitive for the majority of start-ups and even for some established SMEs. I believe, Sir, that our existing system could benefit from the consideration of a second-tier patent system to provide cheap, fast, limited rights for lower level or incremental inventions. SMEs and start-ups would be the main beneficiaries of such a lower level system.

In a mini research I conducted, I found that Australia has two systems of second-tier patents - petty patents and innovation patents. I would like to suggest that we should look at these models and modify them to suit our needs. The development of the Australian second-tier patent protection is premised on the need for a quick, less expensive and more easily obtainable patent protection for inventions with a short commercial life. It also provides an avenue to protect functional innovation, that is, innovations which lack the level of inventiveness required for patent protection and whose functionality was not protected by design laws.

Land Acquisition Act

Ms Indranee Rajah: My next cut, Sir, is on the Land Acquisition Act, and I have three points to make.

The first point is whether the Minister would consider redrafting section 33(5)(e) of the Land Acquisition Act. That section governs the compensation that is to be

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paid when land is acquired. And it says that the compensation would be the market value of the land, but it must not exceed the price that a purchaser would pay for it on the basis of either existing use or in anticipation of continued use of the land for the purpose designated in the development baseline referred to in section 36 of the Planning Act. The problem though is when you refer to section 36 of the Planning Act, it does not talk about a purpose. It talks about the development baseline which is a value. So, the two do not match, and it does not actually make sense in plain English. In fact, I would strongly recommend that anybody who wants an instant migraine should try reading the two sections of the different Acts together. You can in a very roundabout way figure out what it means, but it is an extremely convoluted way of doing it. So I would ask if that provision could be amended.

The second point I would like to highlight is the problem created by road zoning. Prior to the 1998 Masterplan, there were road interpretation lines. After the 1998 Masterplan, all the road widening lines were zoned roads. The intention behind that was a good one. But the problem was that you have a piece of land which before just had a road widening line. And when compensation is made on the basis of zoning, you take into account the whole piece of land and you compensate on the basis that it is car park or it is residential. But once a portion of it has been zoned "road", the value immediately becomes zero. So, it has an impact on the Land Acquisition Act. Because when you acquire, let us say, the whole of the land and one-quarter of it is zoned "road", in the past you would get compensation for the whole piece of land, but now you get compensation essentially for three-quarters because the last quarter effectively has a zero value, and that is what happened in the case of the car park that was acquired from the church that owned the land. This is an unintentional

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and unforeseen problem, but it is something that does need to be redressed. I understand that there is a discretionary fund, but that should not be the case. Compensation should be made in accordance with the principles.

The third question is whether or not the Minister would consider the reverse Pointe Gourde principle. Basically, if there is an increase in the value of the land as a result of compulsory acquisition scheme, you disregard that. But the converse is not true - you do not disregard a decrease. It means that it is a double whammy for somebody who has the land acquired. I was wondering if the Minister would consider whether it is a matter of policy, so that we would be able to review this.

Open Space for Public Use

Mr R Ravindran (Marine Parade): Sir, over the years, I have raised the issue of the Singapore Land Authority (SLA) allowing the public to make use of open public space for recreational and other public use. I am very happy that over the last three years, SLA has opened up a lot of open space for use by the public, in particular, by grassroots organisations. In my own constituency, they have allowed me to put up a big hard court, which is very well used on weekends and in the evenings. I think this is something I would like the SLA to go on and open up more space.

I would like to ask the Minister how SLA intends to open up more public space, in particular, even public buildings which are not being used at present, for more use by the public and even by business enterprises at a lower cost. Perhaps the Minister could address this issue.

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Sir, first, I want to thank Ms Indranee Rajah for her strong support of the desire to make

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Singapore an international arbitration hub. It is true that there is tremendous potential to be tapped. But last year, we made very good progress to strengthen our position as an arbitration hub. For example, the International Chamber of Commerce and the Singapore International Arbitration Centre (SIAC) held the first ever symposium on international arbitration which attracted over 160 participants from 10 countries. Other major events lined up include regional conference of United Nations Commission on International Trade Law, which will focus on the Model Law on International Commercial Arbitration. The International Bar Association and World Arbitration will also be held here. And down the road, we are looking forward to the 16th International Congress of Maritime Arbitrators.

The SIAC, in particular, has done a lot for our positioning as an international arbitration hub. Together with the Singapore Maritime Foundation, it has established the Singapore Chamber of Maritime Arbitration, a purpose-built institution for maritime claims. It will also be setting up a joint venture dispute resolution centre in India, in partnership with India's Construction and Industry Development Council. It also sets up Asia-Pacific's first registry for lodging arbitral awards to authenticate awards prior to the enforcement.

Ministry of Law, on its part, has set up an ADR Advisory Committee to be a forum for feedback and input on how further we can make progress in this regard. This Committee has practitioners and representatives from local ADR institutions, ADR practitioners, academia, Government representatives and members of the Judiciary.

She is right that for an arbitration hub, we need ancillary services like transcription, translation, hotels. We are looking

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into these. They are, of course, readily available in the market, and SIAC has been using them extensively for arbitrations. When parties for ad hoc arbitrations approach SIAC, SIAC certainly helps them locate and secure the necessary services. And I would assure her that MinLaw and SIAC will continue to develop networks of related service partners to ensure that arbitrations held in Singapore will benefit from the best availability of such services.

She made the point, and I agree with her, that the choice of law and the advantage of Singapore law is important in arbitration. She will be aware that the Academy of Law actually established a Working Group, chaired by Judicial Commissioner as he then was, Mr V K Rajah. They concluded that while Singapore law was not in the position to supplant the US and UK laws completely in business dealings, it could be the preferred alternative in this region. So, she is right here. The greater use of Singapore law in international transactions will bring benefits in the form of more work for legal services and other related services. I think that our commercial law and our legal system can be like a bridge between the businesses in the East and the West, and we should take full advantage of this.

The Committee, headed by Mr V K Rajah, makes some very useful and practical recommendations which I do not have time to go into the details here, but these recommendations are designed to further the use of Singapore law in arbitrations, contracts and legal instruments. The Chief Justice and Ministry of Law have accepted the recommendations of the Working Group. Mr V K Rajah now heads a committee for the international promotion of Singapore law to implement these recommendations.

Mr Ahmad Khalis spoke about ADR, and I also welcome his support for these moves. His question was ADR vis-a-vis

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the courts. I think that while litigation in the courts will continue to be the integral part of our dispute resolution infrastructure, in the past 10 years or so, substantial progress has been made in developing ADR infrastructure and building up an ADR culture. In the Subordinate Courts, mediation and ADR are used extensively to complement the traditional court processes in the form of Court Dispute Resolution (or "CDR" for short). Over the recent years, CDR has broadened to cover civil cases at an earlier stage of the proceedings as well as the use of online virtual mediation. So, in answer to Mr Ahmad Khalis, the answer is, yes, ADR in the Subordinate Courts does provide a less costly, faster and a more harmonious method of resolving disputes by reaching an early settlement. I think it has proven to be very effective. Mediation is used not only in civil cases but also in family, small claims and magistrates' complaints cases.

From 1994 to 2004, some 48,300 civil matters were mediated, with an average settlement rate of over 94%, which is very good. For community disputes, amendments were made to the Community Mediation Centres Act last year, and this strengthened the power of the magistrates to refer appropriate disputes to mediation at the Community Mediation Centre without the need for the consent of all the parties; so that has helped. This way, suitable community disputes are now being channelled immediately to a pilot CMC facility co-located at the Subordinate Courts' premises itself. So this procedure that we have put in place results in savings of cost and time, as the parties will be able to make only one trip to the Subordinate Courts and, if their dispute is resolved, they need not proceed further with their complaint. The results of this pilot project have been positive. Since it was piloted in May last year, some 140 cases have been mediated in the facility, with a 71% success rate.

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In the Supreme Court, the parties are not required

to first undergo mediation before their cases are heard. However, they may do so at the Singapore Mediation Centre. And there has been positive feedback in this regard. 83% of the parties involved in SMC-related mediations have indicated savings, in terms of time and money. There are no plans currently to introduce separate mediation processes for claims which are currently not heard by the Small Claims Tribunals. The reason is there exist many other existing avenues for the resolution of disputes.

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I take note of what Mr Ahmad Khalis said about hire purchase disputes, and property disputes. It depends on the nature of the dispute because some of these hire purchase disputes can be referred to CASE for their processes. Property disputes, of course, can be very diverse in nature and I will have to have details of the type of property disputes he has in mind. If it is consumer-related, CASE or professional bodies which have ADR can look at the matter. If they are more serious, they could be referred to the Strata Titles Boards. And if they require more specialist treatment, then bodies like the Singapore Institute of Surveyors and Valuers have their own mediators which can handle these matters. So basically, we have a whole range of ADR in Singapore, and this is not finite. We have to look at how we can develop this ADR mechanism and see if there are other clusters or areas of disputes which are not catered for, and if so, I will be open to suggestions as to how we can have additional ADR facilities.

Now, I turn to the comments made by Mr Khalis, Mr Inderjit Singh and Dr Maliki on insolvency, bankruptcy and so on.

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First, Mr Khalis asked how the OA and IPTO have helped in assisting people who have got into financial difficulties or faced bankruptcy. Let me first say that, since 2002, IPTO has set up, what we call, a Pre-bankruptcy Advisory and Mediation Centre to encourage creditors and debtors to enter into mutually acceptable debt arrangement to avoid bankruptcy. And last year alone, close to 1,700 debtors have made use of this Centre's services. Furthermore, the OA is also considering introducing a wage earner's reorganisation plan which is similar to the US Chapter 13 approach, a point which Mr Inderjit also mentioned. This wage earner's reorganisation plan will enable debtors to repay their debts to the creditors over a period of time through the Official Assignee. It is close to what Mr Ahmad Khalis is envisaging as a form of "judicial management" for individual debtors. I will come back to this when answering Mr Inderjit's points.

In the area of bankruptcy administration, let me say that we have to take several considerations in mind. First, we need to strike a balance between the interests of creditors and the interests of debtors. Secondly, we do not want a situation where those who have become bankrupt do not take their financial obligations seriously and do not cooperate with the Official Assignee. So, the OA makes a distinction between those who are cooperative and those who are downright uncooperative. I think that is logical because the majority of bankrupts are uncooperative and do not make any efforts to contribute to their bankruptcy estates. They would be placed in the red zone and monitored more closely and made to observe more stringent requirements. Existing bankrupts also have to attend financial planning seminars so that they can better manage their finances.

If I may move on to the points made by Mr Inderjit Singh, basically his call is for

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proposals to help companies and individuals to avoid getting into bankruptcy. He has suggested introducing the approach of US Chapter 11 so that companies in financial difficulties can apply to court for protection while they continue to operate with the same management team. I think that is basically the thrust of what he is saying. In Singapore, the judicial management system allows a company or its creditors to petition for the company to come under judicial management if the company is unable to pay its debts and there is a reasonable probability of rehabilitating the company or preserving all or part of its business as a going concern. The company would then be taken over and run by judicial managers.

I am open to suggestions along the lines that Mr Inderjit Singh has made. But we have to look carefully at the pros and cons of both the Chapter 11 system and the judicial management system. I think Mr Inderjit Singh is aware that both have their upsides and downsides and both have their critics. The Chapter 11 model permits the people who may have gotten the company into financial trouble to lead the charge to get the company out of trouble. Some critics are of the view that Chapter 11 serves only to keep existing management entrenched to the detriment of legitimate creditors. Whereas under judicial management, the management which knows a great deal about the businesses is removed and, under such circumstances, it may be difficult to rehabilitate the company. So there are these pros and cons.

But there is an important committee which is looking into the introduction of an omnibus insolvency legislation. By "omnibus", I mean one that would have laws, principles as well as mechanisms applicable to both companies and individuals. The Official Assignee and Official Receiver formed the omnibus insolvency legislation committee last year, comprising representatives from both the

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private and public sectors for the purposes of reviewing our insolvency laws and creating such an omnibus legislation. As part of this exercise, this committee is also studying the feasibility of introducing the Chapter 11 approach as well as the Chapter 13 approach suggested by Mr Inderjit Singh.

At this stage, I do not want to pre-empt the work of this committee by indicating what might be the outcome of the committee's recommendations. But let me elaborate what I have mentioned earlier about the wage reorganisation plan. This will be modelled after the Chapter 13 approach except that the wage reorganisation plan would be supervised by the Official Assignee, and not the court. Such a wage reorganisation plan will enable individual debtors to avoid bankruptcy by allowing them to enter into a repayment plan to repay creditors over a period of time, whilst under protection from legal actions by creditors. I think that would be a welcomed move. What would be the trigger event? The trigger event could be when a debtor receives a statutory demand from a creditor demanding payment. The details of the scheme will be worked out by the Official Assignee and the committee which I have mentioned. We hope that this scheme will offer some breathing space to cash-strapped debtors by giving them more time to repay their debts over a period of time. We hope that this omnibus legislation may be ready by the end of this year.

That takes me to Dr Maliki's points. He asked about the growing trend of younger people being made bankrupt. Let me say that looking at the age profile of bankruptcy cases from 1996 to 2004, it shows that about 6.4% of bankrupts are from the ages of 21 to 30; 32% between the ages of 31 to 40; and more than 38% between the ages of 41 to 50. So the majority of bankrupts, some 71% are in the age group of 31 to 50, and 6.4% in the age group 21 to 30. But in the last

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four years, an average of 490 such young people are made bankrupt every year, and they account for 13% of bankruptcies every year and, of course, that is a source of concern.

Another point which I think Members would be interested is that we found that over 90% of bankrupts were made bankrupt because of non-business related reasons. And of this 90%, over 67% were made bankrupts because they have overspent on credit facilities, particularly credit card facilities. Statistics showed that more people are being made bankrupt or making themselves bankrupt and the figures rose sharply from 801 in 2003 to 941 in 2004. So what are we doing about it? The OA has set up a self-petition management team to closely monitor the self-petitioned bankrupts. We need to ensure that they are not abusing the bankruptcy process. We hope that people who self-petition do not do so under the false illusion that they do not have to pay their debts and would be automatically discharged after three years. Because that is not going to happen. We do not have a regime of automatic discharge and we want bankrupts to take their obligations to cooperate with the OA and the creditors seriously.

As to publicity and education, I agree that this is not only the work of the OA. We have to work together with other agencies to educate and make public awareness of people who run into financial difficulties or who may run into financial difficulties that self-petitioning is not a panacea for their problems. My colleague will take the rest of the questions.

The Senior Minister of State for Law (Assoc. Prof. Ho Peng Kee): Sir, first, let me address Ms Indranee Rajah's concerns on land acquisition. Sir, when Government acquires land, our approach is to pay a fair and reasonable total compensation

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package, according to the provisions of the LAA's current policies and practices. I think she will also know that we have in place an ex-gratia payment scheme introduced in 1982 which we have, over several steps and several years, enhanced quite a bit. This is paid to land owners on a case-by-case basis to ameliorate hardship suffered by them.

Sir, the next point I want to make is that if a portion of a zoned road is acquired, it will not necessarily result in nil or nominal compensation being awarded. The compensation amount payable for each property varies according to the physical attributes of the property and, of course, the facts of the case. Indeed, there have been cases where Government has paid compensation for strips of land that are acquired when it was zoned road. I understand that Ms Indranee had acted for a land owner in one such case. In that case, the Appeals Board took the position that the strip of land acquired had no market value on its own but awarded compensation based on severance damage.

Sir, compensation for severance damage is provided for under the Act, (section 33(1)(c)), ie, not given ex-gratia payment. The Land Acquisition Appeals Board used the before-and-after method to determine severance damage and that I think is something which lawyers will know - computing the compensation and deriving it from the difference between the market value of the entire lot before acquisition, less the market value of the remaining land after acquisition. Going forward, when we acquire land in part that is zoned road, based on the Board's approach, I would expect that there would be some compensation given, based on severance damage, in many of these cases.

Ms Indranee Rajah also asked whether the Land Acquisition Act should be

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amended to clarify the reference to the purpose designated in the development baseline, referred to in section 36 of the Planning Act, and to consider also taking into account the negative Pointe Gourde principle in statutory compensation. I agree with her that the reference to the development baseline in the Land Acquisition Act does not define the purpose directly. However, the current drafting has been in place since 1998 and it is understood by those in the industry that development baseline refers to the paid-up developmental rights of a site. So there is no ambiguity there. I think, more importantly, as she has said, even though it is a circuitous road, the meaning can be derived.

12.45 pm

The next point that I want to address is the application of the negative Pointe Gourde principle.

There is a decision on that. The Court of Appeal has ruled by a majority decision that the principle does not apply in Singapore because it is not part of our law. So, the question is whether we should amend the Act to reflect the minority judgment and the views expressed by the judge there. Sir, we are reviewing the LAA, but I would say that it is unlikely that we will incorporate the negative Pointe Gourde principle, and there are good reasons for not doing so.

As Singapore develops, Government will continue to introduce measures to enhance the use of our limited land. Some of these measures may enhance the value of properties nearby; others may lower them. Indeed, Singapore's rapid development since independence is owed in no small way to the setting aside and acquisition of land for key infrastructure, including roads and expressways. For example, landowners benefit from enhanced property value when an MRT station or a giant retail centre is built nearby. Also, many Singaporeans benefit

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from governmental action, eg, in up-zoning when the properties are given a higher plot ratio which can facilitate en bloc development. Of course, on the other hand, some landowners will suffer or may suffer if there is a columbarium built nearby or part of the land is set aside for road development. In short, Sir, some owners will enjoy a gain, others will suffer a loss. In any case, if landowners still suffer from financial hardship, the Government does give ex-gratia payments on a case-by-case basis in addition to the statutory compensation, and indeed this has been done.

The last point, which is also an important one, is that if the property on a partly zoned road is put up for sale, the buyers will factor the depressant effect of the road zone into the purchase price. That is the market value of the property for which the owner is compensated. In other words, if we disregard the effect of the road zone on the property value, we would actually be deviating from market practice.

Let me now quickly go on to Mr Ravindran's point. First, I thank him for making the cut again. I think, repeatedly in Parliament, he has urged us to do more to open up State lands and State properties, and, as he has shared, we have been doing this. So, we will continue with our pro-business and pro-community measures. As he knows, for community measures, we have opened up many plots of State land. For example, 78 TOLs have been issued for purposes, such as football and gardening plots, and at a discount to the market. In fact, now it is about 85% discount to the market. So, our residents all enjoy that on the ground. Recently, we opened up 153 pieces of State land, replacing "No Trespassing" signs with "Enter-at-your-own risk" signs, and that, as we see, has enabled many Singaporeans to use these fields on weekends and other times. Going forward, a hundred more of such lands will be

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opened up. SLA also works with other relevant agencies, like MOE, MCYS, SSC, to open up various lands including, recently, one at Upper Serangoon Road for archery. Of course, schools are being opened up. But that is driven essentially by MOE and MCYS. We will facilitate. Then, of course, we also have a portal which sets out a comprehensive list of vacant State lands for viewing. Grassroots organisations can apply online for use of State land for community and social purposes.

Another key thrust of SLA is to help businesses better use State lands. For example, under the partnership with EDB, SLA has released a number of former school buildings to private schools, and this has enabled them to quickly start off the programmes at a lower upfront investment. Also, SLA works with the film producers to make available old colonial buildings and other suitable sites for filming purposes. To encourage and reward creativity, SLA is currently considering proposals under the "first mover" initiative, under which companies that propose new business uses for vacant State properties would be given an advantage to secure the property for such uses, thus incentivising them to come up with new business uses for State properties.

Lastly, companies which propose new and novel uses for State properties at the tender submission stage will be recognised for their business ideas. We are now considering inserting an entrepreneurial clause where bidders can propose and price in innovative uses not specified in the tender. So, all these are new initiatives, and we will press on with opening up more lands and State properties.

The third point is on IPR by Dr Maliki. It is a good point. IPR has to be made known to Singaporeans, and indeed many things have been done by IPOS to reach out to all sectors of Singaporeans,

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including SMEs. I think Ms Indranee made the point in her Budget speech, so did Dr Tan Sze Wee, on the need for us to educate SMEs and members of the public, including children and parents, that Dr Maliki talks about. So, this is being done, and more will be done. For example, last year was a busy year for IPOS. IPOS had many key programmes, eg, IP Consult series, software, asset management, seminars, grassroots and schools outreach. Indeed, even for school children, which is one of Dr Maliki's focuses, more than 10,000 students were exposed to IP matters through school seminars and talks alone last year.

Going forward, we will do more, and parents and children will be able to have the benefit of knowing more about IP. For example, we have this "Honour IP" or HIP Alliance, which is a collaboration with IP rights holders. If you go to the cinemas - I do not know whether you have the time to do that - but if Dr Maliki has the time to do that, he will see that there is this campaign in the cinemas, outdoor and print media titled "Say No to Piracy". So, we will step that up.

Recently, we launched a short and light-hearted video "Copy Not Right". This contains useful tips on respecting copyright in both the physical and digital realms, something that Dr Maliki talks about, which will also be distributed in schools. With this outreach, more parents and children will know what they can do and what they cannot do. Indeed, right now, even as we talk, the International Trademark Association is holding the inaugural Asia-Pacific forum on "Emerging Issues in Brand Protection" here in Singapore. In another key development, the World Intellectual Property Organisation (WIPO), the UN's specialised agency for IT, is opening an office here in Singapore. So, we will continue with that.

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The last point, which is raised by Dr Ahmad Magad, is on whether we should introduce a second-tier patenting system to reduce the cost and time taken to register patents, particularly for those which may be of a lower order, in terms of inventiveness, which may not qualify under the standard system and which may probably require a shorter protection time because it has a shorter shelf life.

First, I would say that the figures given by Dr Magad, ie, $30,000 to $100,000, appear to be on the high side, because to register a simple patent in Singapore, you probably need about $10,000, and this is the type of patents we are talking about, ie, simpler inventions. Nevertheless, I take his point that we should always be mindful about costs and also the time taken to register a patent. That is why, indeed, last year, in Parliament, I enacted amendments to the Patents Act to introduce a two-track system to enable inventors to register their patents within 42 months for the faster track, and 60 months for the longer track. Nevertheless, I have asked IPOS to study other systems which may be in place with regard to the second tier, because we always want to improve all the time. As to costs, too, of course, Dr Magad will know about the Patent Application Fund Plus which is administered to help SMEs, and that is his concern, and this fund will also help the financial aspect of it.

In short, Sir, we will consider this suggestion. If it helps, we will implement it. If it does not, then we would not. But whatever it is, we are open to suggestions.

The Chairman: We still have 10 minutes for clarifications. Yes, Ms Indranee.

Ms Indranee Rajah: Clarification on the road zone, Sir. It is true that there is a separate head for compensation of

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severance damage. But that only works when it is high yielding land, because you look at the value before and the value after. So, if it is a high yielding land, like a petrol station, for example, there will be a fairly decent value. But if it is, for example, residential, and we are talking about a strip of garden, the land value will be quite small. And that is actually what happened in the case of the church carpark. In this, I would like just to refer to the Senior Minister of State's reply to Dr Amy Khor's question on 15th of August 2003, where, in fact, he said that the re-zoning had led to a valuation of a nominal $1, but he also said it is not the Government's intention to change the compensation approach and that the $1 nominal compensation was actually an unintended consequence. And because it has arisen out of an unintended consequence of the re-zoning under the Planning Department, I would therefore ask whether it can be reviewed and we can actually redress it by legislation, either by saying that if it is zoned road, you give it a certain consideration or, alternatively - and this may be for a different Ministry - instead of using a road zoned, either go back to road widening lines or use some other form of delineation for road lines.

Assoc. Prof. Ho Peng Kee: Sir, the jurisprudence in this area is evolving, because the Appeals Board has been hearing cases on this aspect even after the Kim Keat Road case. That was the first case that caught our attention and, therefore, the Minister and I and other officials had a review to take a look at it. After further consideration, an amount of about $64,000 was given to reflect, in a way, severance damage, because it was calculated on the basis of what would have been the case as the carpark lots were taken away, and what was the severance damage that was being caused. But even the way of calculation also has moved on, because the Appeals Board, in recent cases like ExxonMobil and others,

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has also, in introducing the before-and-after method, shown the way forward, in that even if it is not a throughput method - I think this is one way which has been the basis of computation in one particular case - if we take the before-and-after method, even if it is a garden that is being acquired which is part of a road - of course, I cannot say for sure - it is unlikely that compensation would only be nil or $1. So, that is the way to go forward.

Mr Ravindran: Sir, I am a football player and, over the last two or three months, I am unable to get a football field because some schools are not being very clear in how they give out the school fields. While the MOS clarified how SLA has come out in the open and opened up school fields for use by the public, I think there are other agencies which could do more. Here, the schools definitely could do more. I am just wondering whether the MOS could help us, especially in his capacity as FAS Chairman also, to open up even the schools and to come up with a comprehensive and transparent scheme whereby members of the public can access public facilities, including school fields.

The Chairman: Mr Ravindran, FAS is not under the Ministry of Law, I am afraid.

Mr Ravindran: Yes, Sir. I am just saying that he is the Chairman of FAS. Thank you for the clarification.

Assoc. Prof. Ho Peng Kee: FAS does not control schools. Neither do we control principals. But I think the point is well made, in that really it is an inter-agency collaboration that is needed. So, whilst SLA can facilitate, other agencies must come on board. But I am happy and glad that this topic has been raised in many forums. Yes, indeed, we all know that there are many pieces of land, not least of which are the ones in schools. And principals may have their reasons for not

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opening them up. But that I will leave to the Minister for Community Development, Youth and Sports and also the Minister for Education to consider. But certainly from SLA's point of view, we are more than happy to do our part.

Mr Ahmad Khalis Bin Abdul Ghani: Sir, I am pleased to note the Deputy Prime Minister's and Minister's reiteration that insolvency cases are dealt with according to principles, there is no one-size-fits-all policy, and there is such a thing as the red zone and the green zone. I think it is important that the public be continuously educated on this point. People who may be bankrupts one day should know what is in store for them, and that creditors would also know what their rights are.

The Chairman: Ms Indranee, would you like to withdraw your amendment?

Ms Indranee Rajah: Sir, I would like to thank the Minister for Law and the Senior Minister of State for Law for their responses and for clarifying the Ministry's stance and, in the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $121,244,220 for Head R ordered to stand part of the Main Estimates.

The sum of $226,104,900 for Head R ordered to stand part of the Development Estimates.