COVID-19 (Temporary Measures) Bill

Minister Shanmugam, please proceed with the birthday celebration.

It could not be proceeded with – that was the issue. The man approached the event organiser or the space provider to seek a refund or a postponement. The event was intended to be held on 4 April. The response was the agreement says it can only be postponed if the notice is given 30 days in advance. So, that is not reasonable.

Another case that was highlighted to us involved a couple who had engaged an event planner for their wedding. The wedding banquet was meant for more than 500 guests and supposed to be held in June of this year. When the couple approached the event planner, the event planner told them the event could not be postponed. The planner also told them obligations would be fulfilled even if the wedding did not take place on the date specified in the contract.

So, the positions adopted by the event space provider, event planner, I think are neither helpful nor reasonable. But there are always two sides to every story.

A group of bridal studios wrote a joint letter to me, to highlight the challenges they are facing, with unreasonable couples. The letter stated that couples had approached them “aggressively”, asking for a full refund of their packages. They talked about the cash flow problems they are facing in the current climate. They also pointed out why it was unfair to provide a full refund.

Their studios had provided services to the couples for up to a year before the wedding date and they had collected staggered payments along the way. They had rendered services to the couples. They had made payment to other suppliers.

So, these studios said they would be “very glad” to work out a postponement for the couples with no penalties imposed. And that is a reasonable equitable position.

The Bill does not mandate that deposits be refunded immediately. If we ask all companies to immediately refund there could also be serious trouble.

So, in such situations, there are different solutions possible: (a) to postpone the event, and the deposit is held back; (b) cancel the event, and the deposit is repaid in full or partially, depending on expenses incurred, work done; and (c) if the deposit is to be repaid in part or in full and if the company needs time to repay the deposit, the Assessor will have to consider and decide if time needs to be given.

These decisions can be made by the Assessor if the parties cannot agree. The Assessors will make determinations that seek to provide a just and equitable outcome, looking at all the facts.

The fourth category are hire-purchase agreements or conditional sales agreements. These are agreements where the goods hired or conditionally sold under the agreement are: (a) a plant, machinery or fixed asset used for manufacturing, production, or other business purposes; or (b) commercial vehicles.

Over the course of the past week, we have received letters, petitions from a variety of people, including tour bus owners and drivers. They highlighted their financial plight. One letter we received stated that some excursion buses had been repossessed by financial companies.

Repossession basically means immediate termination from jobs for those who have lost their vehicles. So, many families’ lives, well-being is at stake, where the driver or owner of the bus is the sole breadwinner. So, the aim of the Bill is to help them retain their business and their vehicles, where it makes sense to do so.

The drivers, owners will be assisted by the measures introduced in the Bill. If they are commercial vehicles, they cannot be re-possessed during the prescribed period, if relief is sought and relief is given.

If the finance company, on the other hand, is of the view that it has reasons to justify re-possession, it can state its position to the Assessor and the Assessor will consider the positions held by both sides and make a determination that is just and equitable.

It is estimated that the value of hire-purchase agreements in respect of motor vehicles at the end of 2019 could be about $2 billion.

The fifth and final category are certain types of secured loan facilities given to SMEs.

These SMEs are defined as entities where the turnover of the group does not exceed $100 million in the latest financial year. If such an SME is unable to repay its instalments to the financial institution due to a COVID-19 event, then some actions cannot be taken against it. For example, security that it has given over real property or immovable property located in Singapore – you cannot enforce against that. And there can be no enforcement of security against movable property if that movable property is a plant, machinery or fixed asset located in Singapore and used for manufacturing, production or other business purposes.

Again, this is a very large sector. An estimate of the total value of loans outstanding to SMEs which might fall into this category is at about $76 billion.

Let me now move on to the determination of disputes by Assessors.

I have repeatedly emphasised – this is a crucial period, requires understanding from everyone. Some compromise and sacrifice is necessary from all sides to see us through this crisis.

Our approach is, we strongly encourage parties to try and come to a common understanding. If resolution is not possible, the Bill provides for disputes to be settled by Assessors, who will be appointed by my Ministry. The determinations made by Assessors – there will be no appeal. The parties will not be allowed to have lawyers when going before Assessors. And going before the Assessors is also free, no fees.

In the Bill, we have designed the mechanism to provide for a quick, inexpensive and effective practical solution. Subsidiary legislation will set out the procedure and practice for these proceedings.

There will be 12 panels, each headed by a State Court Judge. And we expect to appoint 100, maybe more, Assessors. They will try and hold hearings as quickly as possible. After submission of all relevant documents, there will be a guidance that they should hear these matters quickly. It also depends on the number of appeals they are faced up with and whether it is a complex dispute, requiring more documents.

We are working hard to ensure that the necessary infrastructure is in place to facilitate this process.

Sir, Part 3 of the Bill provides an additional safety net for individuals and businesses, by making temporary modifications to bankruptcy and insolvency laws.

First, for individuals under the Bankruptcy Act, we are going to increase the debt repayment scheme to cover up to $250,000, as opposed to $100,000 in the past. It is a pre-bankruptcy scheme. The increase in the threshold means that more individuals can participate in the scheme to avoid bankruptcy.

Second, in order to make a bankruptcy application, the amount owed must be a minimum of $100,000, instead of $10,000. And we are extending the minimum number of days that must elapse from the service of a statutory demand. You have got to serve a statutory demand and you have got to wait for a number of days before you can serve a bankruptcy notice. That used to be 21 days. We are going to make it six months. Which means, you have got to serve a notice and wait for six months. And the person must owe you at least $100,000 before you can proceed for bankruptcy.

Likewise, we are going to deal with debts that companies owe for insolvency purposes. Increase from $10,000 to $100,000. A company cannot be made a bankrupt unless it owes a minimum $100,000. And likewise, we are also going to increase the number of days from service of a demand, from 21 days to six months.

The Bill will also provide a defence to an offence under section 144 of the Bankruptcy Act for a bankrupt who incurs debt without expectation of being able to pay for it. This is in the context of debts that were incurred during the period for which temporary measures apply and a similar defence will be provided in relation to the Insolvency, Restructuring and Dissolution Act 2018, as well as the Companies Act.

Sir, let me now conclude this part of the speech for this Bill before my colleagues take over. The measures in this Bill are one part of the wider efforts to address the impacts of COVID-19. We will do all we can to alleviate the economic pain being felt. We cannot take away the pain completely, but we can help Singaporeans meet their immediate needs and ensure that our economy, as a whole, receives some help.

At the same time – and this is a message that we have consistently reiterated – this is not a crisis that the Government acting on its own can overcome. It needs the cooperation of all Singaporeans. The essence of this Bill reflects that spirit. If everyone looked after their own narrow self interests, we will not come through this crisis well.

The Bill, therefore, provides a framework to hold the strict enforcement of certain legal rights in abeyance for a period of time. That buys time for landlords and tenants, banks and lenders, other contracting parties, to focus their minds on how to get through the crisis.

But the law can only go so far. It is also up to each individual Singaporean to have a sensa of fairness. We hope that the spirit of SGUnited will underpin the many conversations to be had between contracting parties on how to move forward from this.

If we are unable to pull together as a society, to have this sense of fairness, I am afraid that even the most interventionist of laws would not ensure that we can recover well.

Let me end by coming back to how we put this Bill together. We decided in late March that an intervention of this type is going to be necessary. We set up a committee of private sector professionals and different Ministries. We had to be careful because, as Members will note, the total value of the sector that is being dealt with is over $120 billion. With the help of the committee, we were able to both conceptualise the ideas and draft the legislation in nine days. The work involved many agencies – MOF, MTI, MND, MAS, AGC. Two private sector lawyers, Sushil Nair and Patrick Ang, recognised as amongst the leading experts in their field, worked with us to conceptualise the framework, almost full time over the course of nine days. Others in the committee included Mr Lim Sim Seng from DBS; Ong Yew Huat, now non-Executive Director of UOB; Andrew Lim, Group CFO of Capitaland; Keith Magnus, co-Chairman, Asia and Senior Managing Director of Evercore; Mr Ganesh from Soilbuild; Mr Melvin Ang, Chairman of an entertainment company MM2 Asia; and the Attorney-General Mr Lucien Wong himself, supervised the drafting of the Bill, clause by clause, together with outstanding officers from AGC.

We were lucky to have the AG himself personally involved. As some here will know, he is recognised as world-class and the best corporate lawyer in Singapore when he was in practice. He gave us much valuable advice – what worked, what was doable, what was not doable. And because of him and his AGC team, the private sector professionals, and the Government agencies coming together, we were able to bring this Bill to Parliament so quickly.

I wish to thank all of them. We owe them a lot in helping us with this Bill, and the large numbers of Singaporeans, who I hope will be helped by this Bill. We have made it such that we can add on to it because almost inevitably, issues will arise, and we could not have foreseen all of them. We will come back to Parliament where necessary and deal with them.

Question proposed.