Debated in Parliament on 19 Mar 2018.
Mr Leon Perera asked the Minister for Trade and Industry (Industry) (a) how many times were awarded Government incentives clawed back from companies in each of the last five years; and (b) what were the main reasons for the claw-backs.
Mr Speaker, from 2013 to 2017, there were, on average, about 100 cases per year where MTI agencies had to claw back incentives from companies they were awarded to. This made up less than 1% of total incentive cases over the same period. These cases were largely attributed to non-fulfilment of deliverables or non-compliance with terms and conditions that were set out before the commencement of the projects.
I thank the Minister for his answer. Just two supplementary questions. Firstly, how is the verification of compliance with conditions of incentives generally done? I would assume that there would be declarations made by the company and penalties attached to false declarations. So, is it generally going by declarations made or is there further verification that is attempted to be done by the agencies?
Secondly, is there more that can be done by the auditors, because I assume, in most cases, companies which received these incentives are audited. Can some of the burden of checking be handled by auditors? One assumes the auditors do, actually, based on sample checks, check compliance with the Government's incentives, but they may not do so in all cases, I am supposing. So, is there more that can be done to require the auditors to flag out cases of non-compliance so that some of that burden of checking is outsourced, as it were?
Mr Speaker, I thank the Member for his suggestions. There is a spectrum of ways in which verification, as the Member put it, can be done. This starts from declaration by the companies, obviously. But it also extends to the checks done by our agencies and also, in some cases, there is feedback that is received and they act upon that.
The Member's point on external auditors, the remit of external auditors, in general, is, as the Member would appreciate, to render an opinion as to whether the accounts of the company are true and fair. It is not really about ascertaining compliance with conditions attached to Government's incentives and grants. However, if the auditors themselves are prepared to do it further, it is not costless. It will entail a cost. The question then is who bears the cost of doing that. But I think it is an idea we can think about.
In general, I want to make a point that, as I have said in my reply, these claw-backs constitute a fraction of 1% of all such awards. So, materiality of the issue should be taken into account.
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