HEAD R - MINISTRY OF LAW

Column No : 619

Head R - Ministry of Law

The Chairman: Head R - Ministry of Law. Ms Rajah.

Legal Aid

Ms Indranee Rajah: Sir, I beg to move,

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

If I may, Sir, I would like to speak on the topic of legal aid and the opportunities that people have for legal representation. Before doing so, I should like to declare my interest as a practising lawyer.

Under the Legal Aid and Advice Act, a person is only eligible for legal aid if, (i) the applicant's disposal capital is not more than $7,000, or (ii) the applicant's disposal income does not exceed $10,000 per annum.

If you look at the disposal income requirement, this works out to something like approximately $900 a month for the past year and that is quite a high threshold. The Director of Legal Aid has no discretion to vary this. The Minister can authorise the Director to grant legal aid if the Minister is of the opinion that it is in the public interest that legal aid be granted to a particular person, but the Director himself has got no discretion. There are, of course, very few instances where the issue may be of public interest, but it is important to the individual in question.

There are many instances where a person may earn more than $900 a month, but not very much more than that, and yet still need legal aid. Take the case of a housewife who gets maintenance. Let us say she gets $1,000 a month. That works out to about $12,000 a year. She would not meet the legal aid criterion. But if, for some reasons, her husband cuts off her maintenance and then there is an issue in dispute and she needs to litigate that, she would not qualify for legal aid. So I would like to ask the Minister whether the Ministry would consider amending the Act to look not so much at the income for the past year - because people who fall into this income group, if they are earning something like about $1,000 or $1,200 a month, chances are they would not have much savings anyway - but at the person's current means to determine whether he or she can really afford legal representation at this particular point in time. And, if they cannot, then we can consider extending legal aid to them.

The second question I would like to ask is whether the Government would consider extending legal aid to cover criminal matters. At present, the Act does not extend it to cover criminal matters. In fact, for criminal matters what they do is they go to the Law Society which has a criminal legal aid scheme. But that is a volunteer scheme. It just seems a little odd that for something as serious as a criminal charge, these persons would have to actually depend on a volunteer scheme. So I wonder if the Government might extend the scope of legal aid to cover criminal matters as well.

Bankruptcy

The Parliamentary Secretary to the Minister for Community Development, Youth and Sports and Minister for National Development (Dr Mohamad Maliki Bin Osman): Mr Chairman, the issue of bankruptcy has been highlighted over the last year or so. We use to think that bankruptcy involves only people who are affected by business failures. However, as we learned last year, 90% of bankruptcy cases involved non-business related reasons, the majority are due to over-spending on credit facilities.

Much has also been asked about the regulations governing the issuance of credit facilities by financial institutions. It is agreed that, at the end of the day, it is the responsibility of the individual to honour his contractual obligations when he takes up these facilities or loans. At the same time, however, I think we must also ensure that the financial institutions also exercise their own corporate and social responsibility when granting these credit facilities. We have heard of MAS' guidelines that say that they leave it to the market to find its own equilibrium. But observation of the aggressive marketing strategies undertaken by some of these financial institutions suggests that their profit-orientation may overshadow their social responsibility. If I may say, it is rightfully so, as it is not their core business to be socially responsible. I hope not.

Sir, the concern I have is that the young and impressionable are certainly vulnerable. It is not uncommon for a fresh graduate to receive applications of credit cards and line of credit upon graduation. Some of these are even pre-approved. The most impressionable will, in no time, end up with a couple of credit cards and unsecured loans. Car loans are also easy to come by these days. The lower income is not spared either. Loans in the form of hire purchases are very common.

Sir, statistics given in this House thus far indicate that the majority, about 70% of the bankrupts, are between 31 and 50 years old. However, if we look further, at the younger age group - below 40 years old - the proportion is about 43%. At this age group, one would assume, if they are married, they have dependants. They probably have elderly dependants to support too. Sir, it will take a long time for them to get back on their feet if they are declared bankrupt.

In this regard, Sir, I would like to ask the Minister, amongst those who are non-business related bankrupt petitions last year, what is the breakdown between those who filed for bankruptcy themselves and those who faced bankruptcy petitions against them by financial institutions. Can the Ministry give us the age and education profile of these cases for the last year and an assessment if the trend is more prevalent amongst young educated who actually are asking for bankruptcy?

The Minister for Law also mentioned last year that the Official Assignee's Office (OA) had set up a self-petition management team to closely monitor the self-petition bankrupts. Can I ask the Minister to give an update of the work of this team and what their findings have thus far been. This is important as we must ensure that those who self-petition, do not do so under the false illusion that they can get away without paying their debts. They may not know the strict obligations of a bankrupt under the Bankruptcy Act, for example, there are travelling restrictions, making contracts, etc. What is more important is whether this team in OA's office can develop a preventive education programme to teach vulnerable groups on what they need to do to avoid bankruptcy, and at the same time manage their debts.

Sir, I understand that IPTO has also set up a pre-bankruptcy mediation centre in 2002 to encourage creditors and debtors to enter into mutually acceptable debt arrangements to avoid bankruptcy. I would like to ask the Minister how successful has this centre been in helping these pre-bankruptcy cases.

Lastly, I would like to ask the Minister for an update on the omnibus Insolvency Legislation Act that was proposed last year by the Committee tasked to do so.

Mr Ahmad Khalis Bin Abdul Ghani (Hong Kah): Sir, first on bankruptcy. We saw bankruptcy figures increase some years ago and have remained relatively high since then. While bankruptcy may be the most practical legal resolution in many cases, where debtors are clearly unable to pay their debts, it has its downsides. It is certainly not something that we, as a society, encourage for all cases.

I wish to ask the Minister whether bankruptcy figures are beginning to show signs of abating and, if so, what factors contribute to this. Like my colleague, Dr Maliki, I wish to ask the Minister for the progress on the pre-bankruptcy mechanism that was instituted a couple of years ago, how successful has it been and whether improvements can still be made to it.

Intellectual Property

Sir, on intellectual property, the Government has stated its commitment to position Singapore as a world-class knowledge research and design hub in several areas, including biomedical sciences, nano-technology, financial services and even lifestyles. In this regard, the Government has put in place a robust legal framework for intellectual property. Can the Minister give us an assessment of the growth of the IT industry in Singapore in the last five years? I understand that the World Intellectual Property Organisation Diplomatic Conference would be held here in Singapore later this month. Can the Minister inform us what is the significance of this conference being held here? How else can Singaporeans benefit from the IT industry? If there is much benefit, can the Ministry do more to encourage professionals such as lawyers, to include intellectual property in their practices?

Next, how can the Government further encourage inventiveness among ordinary Singaporeans? Are our patent registration procedures too onerous or costly? And, if so, can these be improved?

The Chairman: Dr Tan Sze Wee is not here.

Electronic Record-Keeping

Dr Ahmad Mohd Magad: Mr Chairman, Sir, in line with Singapore's positioning as the leading information technology hub, I would like to propose that electronic record-keeping of documents be considered and permitted as an alternative to hardcopy storage documents. Such a measure would contribute not only to enhance business efficiency but also further reduce business cost.

Mr Chairman, good electronic record-keeping requires planning and budgeting for data migration and conversion as well as complying with laws and regulations on how to retain business records. Keeping records over a long period can be costly if they are not properly maintained and managed, especially if the records become a subject of litigation. However, with the current state of electronic storage technology, I feel that it would be more cost effective and efficient if companies are provided this option by law to store their records electronically. The key to it is to ensure that the proper legal framework is put in place, including annual audit requirements to ascertain that companies adopting this option are in proper compliance.

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Mr Chairman, I thank the hon. Members who have spoken. I will answer the questions on legal aid and bankruptcy and my colleague, Senior Minister of State, will take the questions on intellectual property rights.

First, on legal aid. The Member, Ms Indranee Rajah, spoke about the many instances where some people who are in need of legal aid will not qualify under our current criteria. But I need to put matters into context. The approach of looking at the disposable income for the previous year is one that is used in other jurisdiction. Also, to put matters into context, for the past three years, at least 90% of the applicants for legal aid actually have satisfied the means test. For the first 10 months of last year, the figure went up to 94%. So only a small number of people do not meet the financial eligibility criteria for legal aid.

However, I am sympathetic to her point, which is that we may come across some cases, from time to time, which may be deserving of legal aid, but because of the provisions and the criteria they may not be able to receive legal aid from the Legal Aid Bureau. From the figures I have given, I think the overall system and the means test are working. What she is arguing for is really some flexibility to deal with such cases. I will discuss with the Director of Legal Aid to examine how we can work into the system some flexibility or discretion to deal with the real hardship cases, for example, where the person has lost his job and is facing an array of civil actions but whose past income falls outside the criteria. We come across it in our meet-the-people sessions. So, we will look into her suggestions to see how we can put some flexibility without radically changing the overall system. I should add that those who do not satisfy the means test are not really left without recourse because the Legal Aid Bureau does refer them to the many other avenues for legal assistance such as the many free legal clinics that are run by voluntary groups elsewhere in Singapore.

The other point she made in the closing part of her intervention was about criminal legal aid and whether we consider extending it. In the limited time we have today, I do not want to go into details. But this has been explained in this House on several occasions as to why the State cannot, on the one hand,

expend resources in having an excellent Attorney-General's Chambers and prosecution system who are selective in prosecutions and, at the same time, to expend State resources to defend those who are being prosecuted by the Attorney-General's Chambers. But this is a fine argument that can be debated.

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Having said that, I have personally encouraged the Law Society to develop its Criminal Legal Aid Scheme, and I have personally, in fact, given support to them for golf tournaments and other measures to raise funds. I will continue to do the same. But if the Member feels strongly about the position taken by the Government on this issue other than for capital cases where, of course, we provide legal assistance, then she could pursue this either in a Question for oral answer or in an Adjournment Motion.

Let me now turn to the two questions on bankruptcy by Dr Mohamad Maliki and Mr Ahmad Khalis. Let me first deal with the request for information on the trends of bankruptcy. The fact is that the numbers have come down. In 2005, there were 4,078 bankruptcy petitions. This was a drop of about 20% compared to the previous year. Correspondingly, the number of bankruptcy orders by the High Court has also decreased to 3,542, which is a drop of 22%.

I was asked about the profiles. The majority are in the age range of 41-50 years. The second highest group is the age group of 31-40 years. The age group of 41-50 years also accounts for almost 40% of new bankrupts in 2004 and 2005.

I was asked about self-petitions. Most of the bankrupts were made bankrupt by creditors. I am glad to say that the self-petition cases are a very small percentage at 4.3% in 2004, and it came down in 2005 to 2.7%. Of these self-petition cases in 2005, the age group of 31-40 years accounts for 46%.

The main cause of insolvency cited by non-business related bankrupts, including in self-petition cases, is really credit card debts. Other causes included default in payment of other credit facilities, losses incurred from speculation, suffering from ill health or standing as a guarantor for various loans and situations.

Dr Maliki asked for an update of the self-petition management team set up by the Official Assignee. I am glad to say that through the efforts of this team, the number of self-petition cases has dropped in the past year. In terms of absolute numbers, the number of self-petition cases dropped by 33%, from 941 cases in 2004 to 632 cases in 2005.

I was also asked what we are doing about bankruptcies among younger people. As a percentage of all new bankrupts, those from the 21-30 years age group has risen marginally, from 9.4% in 2004 to 9.9% last year. To ensure that young people are able to manage their personal finances, the Insolvency and Public Trustee's Office has recently, with institutions of higher learning like the Singapore Polytechnic, organised consumer education talks. And the objective of these talks is to create awareness and promote the importance of financial planning. We hope that these will bear fruit in reducing the incidence of bankruptcies amongst younger people.

I was also asked about pre-bankruptcy efforts and the success of the pre-bankruptcy and mediation centre. In 2005 alone, about 2,100 debtors turned to the centre for information and advice. They also handled 15 mediation cases, of which four were successfully resolved to the satisfaction of both creditors and debtors.

I was asked whether there is any mechanism for negotiation between debtors and creditors in place. Dr Maliki also asked whether the centre can do more and whether we could pay more attention to the plight of bankrupts in the middle income group. In addition to the efforts by the centre, let me touch on the recommendation by the Omnibus Insolvency Legislation Committee, which I spoke about last year. The Committee found that our current bankruptcy regime does not provide sufficient avenues for the debtor to negotiate a settlement with his creditors to avoid bankruptcy. The Committee has recommended a simpler pre-bankruptcy procedure for the individual debtor who is capable of repaying his debts. They identified Chapter 13 of the US Bankruptcy Code as a workable model. It provides a framework for reorganisation proceedings to allow individual debtors to enter into repayment plans with creditors to pay off the debts over a few years. The Committee now recommends a wage reorganisation scheme that is based on the US Chapter 13 with some modifications to meet our local needs. The trigger point for the scheme would be when a statutory demand is served on the debtor by one of his creditors, or when a debtor self-petitions for bankruptcy. If the statutory demand is not complied with or set aside within 21 days, the debtor must enter into a wage reorganisation scheme. And the debtor who intends to petition for his own bankruptcy will also be subjected to the proposed wage reorganisation scheme. Under the scheme, the debtor must complete his repayment plan within 3-5 years. When payments under the plan have been completed, the debtor will be released from his obligations.

My Ministry is now studying this recommendation and consulting some stakeholders to see if such a scheme can work in cases where, for example, the size of the debts is within practical limits for wage earners, such as $100,000 and below. I think if the scheme works, it will achieve a win-win outcome for both debtors and creditors. A debtor will be able to stave off consequences of bankruptcy, be more likely to remain in gainful employment and thus be in a better position to repay his debts. It also benefits the creditors who can then recover more of the debt which would otherwise have to be written off.

Sir, my Senior Minister of State will deal with the other issues.

The Senior Minister of State for Law (Assoc. Prof. Ho Peng Kee): Sir, I am pleased to inform Mr Ahmad Khalis that the IP industry in Singapore has grown tremendously over the past few years in tangible ways. For example, more IP intensive firms, such as Lucasfilm and Dell, are choosing to locate their operations here. Also many MNCs have chosen Singapore as a base to manage and license their IP in the region.

Mr Khalis asked how Singaporeans have benefited from our robust IP regime. Sir, this regime is a key factor in drawing IP intensive companies to Singapore. And these knowledge-based companies provide a boost to our economy and also create value-added jobs for Singaporeans. Our sound IP regime, therefore, has helped to create a conducive environment for nurturing home-grown innovations and creative activities. In addition, our copyright regime has helped protect the livelihood of home-grown creative talents, such as film makers, Jack Neo and Eric Khoo.

Sir, on the patent front, patent applications filed by Singapore-based entities in the US, a major market, nearly doubled from 460 in 1999 to 880 in 2004. In addition, the number of local filings here in Singapore by Singapore entities rose from 523 in 2002 to 675 in 2004. Also, the number of registered patent agents has grown from 69 in 2002 to 99 today. Therefore, inventors who want to file their patents are not facing hurdles or exorbitant cost. In any case, there are funds, such as EDB-administered Patent Application Fund, to which inventors who need help can turn to.

Sir, as to what more can be done to encourage practising lawyers and other professionals to include IP in their practices, I think the key driver must be the demand for IP services. In fact, the growth of IP intensive industries in Singapore and increasing IP awareness of local firms have spurred the growth of the IP service sector. Beyond IP legal services, new IP consultancies and specialist boutique firms have emerged to offer services, such as IP commercialisation, brand management and IP intelligence as a strategic business too. The IP Academy plays its part by organising key events, such as courses and also research projects and joint events with key partners, both here and overseas.

Going forward, the demand for IP services here is expected to rise, as we double our total R&D expenditure over the next five years. In effect, in a 2005 IPOS survey, seven out of 10 IP service providers were optimistic that the IP industry will continue to grow.

The Intellectual Property Office of Singapore (IPOS) will build up higher value specialist IP expertise, such as patent agency services. There are also other financial support schemes to help companies defray the cost of IP manpower development. For example, there is another EDB scheme called INTECH. INTECH has supported 62 professions over the last three years to undergo training in patent drafting and IP licensing.

Sir, as Singapore companies internationalise, our IP service providers would need to be savvy about foreign IP regimes. IPOS will facilitate this by continuing to organise conferences with major IP offices, such as the upcoming conference on China's IP regime with the state IP Office of China. And also the establishment of a WIPO office in Singapore last year, which is the first outside the US and Europe, will further create opportunities for knowledge networking among local and overseas IP experts.

Sir, the WIPO diplomatic conference that Singapore will host, which Mr Khalis mentioned, in March this year over about 19 days, is significant for us because it will be the first IP diplomatic conference to be held in Asia. More importantly, it signals Singapore's commitment to contributing to the development of an international IP framework. And this conference will provide a platform for knowledge exchange amongst several hundred IP experts from 183 countries to finalise revisions to the 1994 Trademark Law Treaty, which is expected to result in cheaper and more efficient trademark registration procedures for businesses globally.

In summary, Sir, we have made good progress in creating a conducive environment for IP creation, protection and commercialisation. Going forward, we will ensure that our IP regime remains dynamic and forward looking in support of our innovation-driven economy. We will also step up efforts to foster greater IP awareness amongst our businesses and facilitate IP manpower capability development. Finally, we will continue to raise Singapore's profile in the international IP arena to increase our attractiveness as a place for IP intensive activities. So, that summarises our approach, which has worked well and we will press on.

Let me move on to Dr Magad's cut on electronic record-keeping. At the outset, I agree with the Member that businesses that keep their records and documents electronically can enhance their efficiency and reduce their business cost. A good example is NTUC which last year converted 40 million pages of documents into electronic images, a move that will save NTUC $10 million a year when fully implemented. This conversion, which was done under a certified process in compliance with the Evidence Act, has paved the way for NTUC to redesign its work processes and to achieve greater efficiency and productivity.

Sir, the Evidence Act provides a legal framework where electronic documents, produced under a process which has been approved by a certifying authority, will be admissible as evidence in court. And to ensure that the integrity of the process is maintained, the process has to be certified once every year for the first three years, and thereafter once every two years.

Sir, as Dr Magad rightly points out, a proper legal framework, including audit requirements, is required to facilitate certainty and compliance, and this is provided for under the Evidence Act.

But there are also legal and commercial considerations that businesses have to bear in mind, and one such consideration is the Electronic Transactions Act (ETA) which may apply to documents required by law to be retained for a certain period. The ETA allows certain records to be retained in electronic form, provided certain conditions are satisfied. One condition is that the consent of the relevant Government agencies must be obtained.

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Sir, I am happy to inform Dr Magad that MICA, which oversees the Act, is reviewing it. And one proposal being considered is to remove the need to obtain the consent of the relevant Government agency, unless the agency expressly makes known that an electronic record cannot meet this purpose. So it is a default approach. You do it unless they make it known that it cannot be done. Sir, in the case of the Evidence Act, this move will promote certainty and streamline the process of compliance.

Ms Indranee Rajah: I would like to thank the Minister for Law and the Senior Minister of State for Law for their responses and clarifications and, in view of what they have said, I wish to beg leave to withdraw my amendment.

Amendment, by leave, withdrawn .

The sum of $129,543,390 for Head R ordered to stand part of the Main Estimates.

The sum of $98,863,800 for Head R ordered to stand part of the Development Estimates.