Committee of Supply – Head R (Ministry of Law)

Mdm Chairman, the setting up of the Singapore International Commercial Court (SICC) is a good move by Singapore to strengthen its leadership position as a centre for dispute resolution in Asia. Building on the success of the Singapore International Arbitration Centre and Singapore's growing popularity as a venue for international arbitration, this move seeks to position Singapore as the Asian capital for cross-border cases which are determined in Court. If it succeeds, it would serve to enhance Singapore's status as a leading financial and services hub, and will bring benefits to not just our legal sector, but also the commercial services and business tourism industries.

There are two key challenges that we need to address. One is the need to ensure that judgments delivered by the SICC are enforceable overseas, particularly in the key markets of China and Indonesia.

One of the pillars underpinning the growth of arbitration is the New York Convention which allows for mutual enforcement of arbitration awards between all signatory countries and is one of the most successful international treaties of all time.

India and Singapore, being British Commonwealth countries, enjoy mutual enforcement of Court judgments under the Reciprocal Enforcement of Commonwealth Judgments Act. The challenge is to extend that reach into non-Commonwealth countries, especially those from where many disputes originate, that could find its way to be resolved in Singapore.

The negotiation of free trade agreements, like the Trans-Pacific Partnership, affords an opportunity to provide for reciprocal enforcement of court judgments. The continuing moves to liberalise trade barriers within ASEAN is yet another opportunity to do so.

Another key challenge is to dispel the notion that the SICC is a national court, as opposed to an international one. The dilemma is how to build on the "Singapore" aspect of the SICC, which has credibility overseas based on Singapore's well-won reputation for professional excellence, integrity and the Rule of Law, while at the same time promoting the "International" nature of the

Page: 99

SICC.

It has been announced that the SICC will have distinguished international justices serving on its panel of judges, and also will allow foreign counsel registered with it to appear in cases before the SICC. This will go a long way towards convincing international users that the SICC is not just another domestic court. However, the presence of foreign justices, and the admission of foreign counsel, needs to be skilfully managed, so as to preserve the Singaporean nature of the SICC, which will be fundamental, I believe, to its success.

Could the Minister enlighten us on what moves are being made to so address these crucial challenges to making the SICC the success it deserves to be?

Mdm Chairman, with projections of Asia's and ASEAN's cross border trade and investment expected to triple within the next 10 years, it is inevitable that the number and complexity of cross-border legal disputes will increase in tandem. Therefore, there is a need for a neutral and respected dispute resolution hub in the region that will be able to resolve such cross-border commercial disputes effectively.

In light of this, the Minister of Law announced that MinLaw would be facilitating the establishment of two new legal institutions, namely, the Singapore International Commercial Court (SICC) and the Singapore International Mediation Centre (SIMC) in the coming year.

The establishment of these two dispute resolution institutions are based on the recommendations made by the SICC Committee, co-chaired by Justice V K Rajah, Judge of Appeal and Ms Indranee Rajah SC, Senior Minister of State for Law and Education, and the International Commercial Mediation Working Group.

I would like to ask the Minister for Law what tangible outcomes can be hoped to be achieved from the establishment of these two institutions here in Singapore, how the Ministry envisions these two institutions contributing to the growth of our thriving legal sector, and what this would mean for lawyers in Singapore.

Page: 100

It would be strategic for Singapore to position itself to also become a premier centre for both mediation and litigation, building upon its current status as the leading arbitration hub in Asia and to be able to offer a full suite of legal solutions for the resolution of commercial disputes both within and beyond Asia.

Madam, traditional criminal proceedings are aimed at punishing the offender. The crime victim, however, incurs expense and inconvenience and even embarrassment to help the state investigate and prosecute the offence but usually receives no compensation for injuries or losses from the criminal process.

At the Criminal Procedure Code review in 2010, the Government acknowledged this gap by rephrasing the section on victim's compensation. The current section 359 now makes it mandatory for the criminal court, convicting an offender, to consider whether to order him to compensate the victim. During that debate, I supported the amendment. I raised the concern about whether the new provision will be actively used. I noted then that if the Police did not routinely record the losses or damage suffered by the victim in their investigations, the court might not have the necessary information to make the compensation order at the sentencing stage.

How has the new regime fared? In the 2012 answer to my Parliamentary Question, the Ministry revealed that there had been 82 compensation orders made for the whole of 2011. While 82 was certainly improved from the 31 orders made in 2010, it is very small compared to the number of criminal cases where losses and damage is suffered. It was stated that the prosecutors applied for and obtained the orders in appropriate cases. Does this mean the court relied solely or mainly on the prosecutors in deciding this?

I acknowledge that not all criminal cases are automatically suitable for compensation. For example, where civil claims are complicated or disputable, they will need to be separately proved. However, I believe we can consider some changes to increase the likelihood of compensation in straightforward cases, especially for victims who cannot afford to sue separately.

One option is to have a simple joining procedure as has been done in the Netherlands, allowing victims themselves to attach a civil claim to a criminal case so that the criminal court can decide on it at the sentencing stage. It could

Page: 101

also require police investigators to routinely record a simple victim impact statement with details of losses and damage sustained so as to facilitate the court in making a compensation order under the CPC later one.

As the Ministry is looking into the judicial practice in this area, I hope the Ministry will work with the Police and the courts to assess these and other ways to enhance justice for crime victims.

First, amending the Coroners Act. I raised this up in view of the relative lack of public information that was released after the death of an inmate in official custody in 2010 and the lawful discontinuation of the Coroner's inquiry on the same inmate's death last year.

I highlight this case to ask the Ministry to consider a review of the relevant sections of the Coroners Act to require coroners to continue with an inquiry in the case of death in official custody if the defendant or defendants have pled guilty to a criminal charge so the public is served by a continuation of the coroner's inquiry.

A limited review covering death in official custody would be in line with the spirit of the current standalone Coroners Act passed in 2010 shifting the spirit of coroner's inquiry from a fault-finding to a fact-finding regime. This would also be in line with the intent of Parliament as reiterated by then-Senior Minister of State for Law, Assoc Prof Ho Peng Kee, who said that the Coroners Bill of 2010 would better serve the public interest.

On to the next cut on the discharge regime for long-term bankrupts, I would like to enquire if the Insolvency and Public Trustees Office (IPTO) would consider looking actively into the discharge of bankrupts who have in bankruptcy for more than 10 years. While I appreciate the need for IPTO to be thorough and consistent in its assessment of undischarged bankrupts in addition to balancing the rights of debtors and creditors, I would like to enquire from the Ministry if the duration of time the person has been an undischarged bankrupt – as in this case more than 10 years – factors in the decision-making process with regard to discharge and whether long-term undischarged

Page: 102

bankrupts, who have been listed as bankrupts, can be treated differently.

Finally, what is the progress on the review of the bankruptcy discharge regime and its anticipated completion date as announced in last year's COS?

Mdm Chair, the Insolvency Law Review Committee, which was formed by MinLaw to review the insolvency regime in Singapore and comprised a team of distinguished insolvency practitioners, published its report in 2013 which proposed a thorough rationalisation of the insolvency regime in Singapore, including modernising and harmonising the laws on bankruptcy and corporate insolvency. What is the Government's view on the recommendations of the Committee and does it plan to implement any or all of the recommendations?

One important matter on which the views of the Committee members differed was on whether there should be a regime of automatic discharge from bankruptcy. Countries such as Australia, New Zealand, Hong Kong, Canada and the UK all have automatic discharge from bankruptcy after a prescribed period of time, provided the bankrupt complies with his obligations while a bankrupt.

On the one hand, some members of the Committee felt that such a regime would take away personal responsibility on the part of the bankrupts and encourage irresponsible borrowing. They observed that filings for bankruptcy tended to increase, the easier it was to be discharged from bankruptcy.

On the other hand, other members felt that a regime that permitted automatic discharge would significantly reduce the cost of administration of bankruptcy and would better incentivise bankrupts to work towards their discharge.

I am particularly interested to know the Government's view on whether we should have a regime that permits automatic or easier discharge from bankruptcy. Personally, I would favour a regime of automatic discharge, at least in relation to personal bankruptcy, because it would place more risk on lenders and make them more cautious in lending practices. I am personally troubled when credit is sold like a consumer good with attractive marketing. For example, in areas such as consumer credit, credit cards and even licensed moneylenders. If lenders know that borrowers can be easily discharged from bankruptcy, they will be much more careful in lending and this will hopefully reduce the amount

Page: 103

of unsecured credit that is extended to people who should not be borrowing such credit.

Madam, in the course of my Meet-the-People Sessions (MPS), I meet residents who have had to take short-term loans from licensed moneylenders to tide them over a period of time. To the surprise of these borrowers, the interest rates charged by these licensed moneylenders are very high – up to 20% effective interest rate if your annual income is up to $30,000. There is no limit on the interest rate that a licensed moneylender could charge for a person earning more than $30,000 per year. The moneylender is also allowed to collect various types of fees from the borrower. Due to the high profit margin, there is a proliferation of moneylenders in the HDB estates.

Borrowers who take a loan from licensed moneylenders are usually in desperate situations. They are unlikely to be eligible for a loan from the financial institutions. When they have to turn to moneylenders, they find that the loans given to them come with exorbitant interest rates and all sorts of fees. However, many borrowers have no options but to accept whatever interest rates and fees imposed.

I urge MinLaw to do more to protect residents who face temporary liquidity or need cash quickly for a short term. MAS regulates the financial institutions strictly; and MinLaw also regulates pawnbrokers by limiting interest charged by pawnbrokers. MinLaw should also step in to regulate the licensed moneylending industry more strictly and to reduce the maximum interest rate which the moneylender can charge.

Can the Minister let us know whether there are plans for additional measures to protect borrowers and to curb borrowing costs from moneylenders? I call upon MinLaw to also restrict the number of moneylenders in a HDB estate so that borrowers would not be lured into thinking that credit is easily available just at their doorstep. Tougher action must also be taken against any moneylender that uses illegal methods to collect back their loans.

Madam, when the Moneylenders Bill was passed in 2008, it was intended to allow legal moneylenders to charge interest rate in line with other financial institutions in Singapore. Many people

Page: 104

in need of immediate cash thought that borrowing from licensed moneylenders would be safer than unlicensed moneylenders but they were dead wrong.

In my dealings with members of the public, I have seen borrowers' receipts where the effective interest rate amounted to a shocking 43,000% per annum and another where the effective interest rate was at 159,000% per annum.

Let me give an example of a loan given to a security guard. For a loan of $1,600, inclusive of interest and principal, total repayable over five weeks is $2,240 – a whopping interest of 40%. Late payment charge is $800 on each occasion of late repayment. Late payment interest is another 40% per week.

Even the moneylenders themselves have acknowledged that for several borrowers, in order to pay off one loan, loans are taken from another moneylender. In the case of the security guard, she owes 19 licensed moneylenders.

The borrowers who default on their payments, are subjected to tremendous pressure affecting their mental health, physical well-being, family and other ties. With that in mind, there are several measures I would like to propose to better regulate moneylending institutions in Singapore.

First, impose overall cap on interest and other charges payable by a borrower in a credit year. This has to be across the board regardless of income tiers.

Second, define and stipulate the types of payments that moneylenders can charge, for example, the principal, interest and late payment fees only. This is to simplify the terms for borrowers and to close loopholes for moneylenders to be creative and have different types of late payment fees.

Thirdly, limit the total amount a borrower has to pay in a credit year for a loan to be deemed as fully paid. This can be a percentage of the loan amount.

Fourthly, to protect moneylenders from irresponsible borrowers, I propose that a centralised loan database be set up that tracks a single borrower's loans across all moneylending institutions.

Page: 105

Together with the database, we could then look into restricting the amount to be loaned by any number of moneylenders to a single borrower.

With better transparency and greater restrictions in place, I believe that the contract signed between licensed moneylender and borrower can be handled with greater honesty and mutual trust – ultimately benefiting both parties and to the society at large.

(In Malay): [Please refer to Vernacular Speech on Pg xxxx.] Madam, the terms for loans imposed on a borrower by licensed moneylenders are a cause of great concern because it causes hardship to the borrower's family. The interest and other related payments imposed are unreasonable because it can lead to the borrower to be indebted for life.

It is important that the Government take measures to curb the activities of these licensed moneylenders in order to take care of the people's well-being. I propose that the Government imposes limits to the interest amount and specifies the types of payment that can be imposed on the borrowers. Borrowers who have made reasonable payments should be considered to have settled their debt. Steps must also be taken to build a borrowers' database so that licensed moneylenders can monitor those who wish to obtain credit. These measures are important so that we can provide protection to those who had no choice but to borrow money.

Mdm, I thank Members who have given their comments. Two key themes emerge from most or several of the Members who spoke. First, developing a vibrant legal sector; and second, enhancing Singapore's legal framework to strengthen our society.

On developing a vibrant legal sector, Mr Christopher de Souza and Mr Alvin Yeo expressed support for the establishment of the Singapore International Commercial Court (SICC) and Singapore International Mediation Centre (SIMC).

Let me set out the economic context. Cross-border trade and investment in Asia is growing. From 2010 to 2020, global GDP is expected to increase by 73% to over US$100 trillion by 2020. During the same time period, it is expected that Asian economies will more than triple, from US$10 trillion to US$34 trillion. The volume and complexity of cross-border disputes are expected to grow in tandem.

Page: 106

Singapore's legal sector has also grown substantially. From 2008 to 2012, the nominal value-added of legal services sector grew by slightly more than 25%. The value of legal services exported from Singapore grew by more than 60%. Demand for effective and trusted dispute resolution services will continue to rise.

Singapore is well-positioned to be neutral third party venue for dispute resolution in this region. We have a highly trusted and sound legal system. We started some years ago to develop international arbitration in Singapore. That has been achieving significant success. Singapore is now the third most preferred seat of arbitration, after London and Geneva. SIAC is the fourth most preferred arbitral institution worldwide. In recent years, Singapore law firms ranked amongst the top international arbitration practices in Asia.

SIAC's caseload is also growing. New cases rose from 99 in 2008, to 259 in 2013 along and in tandem with a series of measures that we have taken. The total value of disputes rose to a record high of more than $6.06 billion in 2013. That exceeds the combined total of $4.93 billion for 2011 and 2012. SIAC's caseload is predominantly international. More than 80% of cases involve at least one foreign party.

Establishing the SIMC and SICC will extend our success in arbitration into adjacent areas of commercial mediation and court-based commercial litigation for international cases. The idea is to provide users with an entire suite of dispute resolution services and they can choose from those which best meet their needs.

Let me say something about the SIMC. Mediation is an important complement to arbitration and litigation. It allows parties to mutually arrive at mix of legal and non-legal solutions in an efficient and cost-effective manner.

It is intended that SIMC will offer world-class commercial mediation services. It will also have a panel of high quality international mediators and experts, and it will provide innovative user-centric products and services. My Ministry is currently working with industry stakeholders including the Singapore Business Federation, the Singapore Academy of Law and SIAC to establish SIMC. We will put in place necessary legislation to strengthen and support the framework for mediation. We expect that the SIMC will be launched later this year.

Page: 107

Now, let me turn to SICC. Similar to SIMC, SICC also aims to attract international cases which have little or no connection to Singapore. Parties who prefer the transparency of open Court proceedings, the availability of appeal, or are involved in multi-party or non-arbitrable disputes, may prefer SICC to conventional international and commercial arbitration.

There are similar models elsewhere, including the High Court of England and Wales, which has a specialist Commercial Court in London, well known for the large number of cases which involve international parties. The Dubai International Financial Centre Courts were established to handle international commercial disputes as well.

Why would a party choose SICC? Singapore is known for its commitment to the rule of law. Our judiciary is well regarded internationally for quality of judgments and efficiency. Singapore is a neutral venue in Asia and this makes us especially attractive to foreign parties involved in cross-border disputes.

Mr Alvin Yeo raised two points: the perception that SICC is a national court, and the international enforceability of SICC judgments. On the first point, SICC will be constituted as a division of the High Court of Singapore. SICC judgments will be treated, and enforced, as High Court judgments. My Ministry is preparing legislative amendments to establish the SICC. The necessary amendments will include changes to the Constitution, the Supreme Court of Judicature Act, the Evidence Act and the Legal Profession Act. We will go for public consultation soon on these. We will also consider the composition of the Court, judges, rights of audience and related issues. All of these need to be considered carefully, bearing in mind that primarily we are looking at attracting cases which have no connection with Singapore. So, that is new work that is coming in.

On Mr Yeo's second point, namely the issue of enforcement of judgments abroad, SICC judgments may be enforced by registration in countries listed under the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act (REFJA), similar to any High Court judgment. For other common law jurisdictions not covered by these pieces of legislation, SICC judgments could be enforced as a common law debt. But I do accept Mr Yeo's point on enforceability. This has been considered. We will need to explore ways to enhance enforceability of SICC judgments. To some extent, of course, if parties in the first place are not subject to compulsory jurisdiction but are consenting to jurisdiction, then usually they will also take care of enforcement by contract.

Page: 108

In its report, the SICC Committee suggested that Singapore consider acceding to the Hague Convention of 30 June 2005 on Choice of Court Agreements. My Ministry is studying the feasibility of this suggestion. Earlier this year, European Commission issued a proposal for an EU Council decision to approve the Choice of Court Convention. Once the EU becomes a party to the Choice of Court Agreements Convention, enforceability of SICC judgments will be enhanced if Singapore decides to be a party to the Convention as well.

Developing Singapore's dispute resolution framework in this way will benefit all Singaporeans. It will add to growing volume of legal work coming to our shores, and create significant opportunities for lawyers based in Singapore and Singapore Law Practices (SLPs). If successful, the SICC will attract more complex commercial litigation to Singapore, and help develop our legal jurisprudence. There will also be economic spin-offs in terms of increased demand for other supporting non-legal services, for example the tourism industry and the hospitality sector.

Now, let me move to insolvency and bankruptcy. On issues of bankruptcy and corporate insolvency, Mr Vikram Nair asked for our views on recommendations of the Insolvency Law Review Committee (ILRC). The ILRC submitted its report to my Ministry in October last year. The ILRC's main recommendation was to unify bankruptcy and corporate insolvency regimes in a single piece of legislation. This is to enhance clarity and access to our laws, and transition and coordination between the various insolvency regimes.

The recommendations were also made to update core areas of Singapore's bankruptcy and corporate insolvency regime. My Ministry welcomes the recommendations of the ILRC. Presently, we are considering feedback received from public consultation on the report, which was concluded last December.

Mr Vikram Nair also raised the issue of discharge of bankrupts. Alongside review of ILRC's recommendations, my Ministry is reviewing the bankruptcy regime. This is with a view towards putting in place a more rehabilitative regime that will allow bankrupts to be eligible for discharge within clear time frames, where justifiable. The time frame for discharge will be differentiated, depending on factors such as whether a bankrupt pays back a targeted amount, whether his creditors object to his discharge, whether there were extenuating circumstances during the bankruptcy, for example, a debilitating illness. This approach should also provide an incentive for bankrupts to cooperate.

Page: 109

At the same time, we are mindful that such a regime should not create a moral hazard. It is likely that upon discharge, all bankrupts' names will be placed on a national register for a fixed period. For those who were uncooperative in paying their targeted amounts, their names will remain on the register. These issues are being considered. As most bankrupts may become eligible for discharge after a fixed period, creditors will also be incentivised to undertake better risk assessment.

Pending these changes, which will require legislative amendments, the Insolvency and Public Trustee's Office (IPTO) has also been actively reviewing current cases where a person has been in bankruptcy for a very long time to determine whether a discharge is suitable. These reviews include cases where bankruptcy orders were made more than 10 years ago. Many of these cases remain in bankruptcy because very little has been paid into their bankruptcy estates and/or there has been very little cooperation with the Official Assignee during the administration of their bankruptcy. For these bankrupts, it will help if they make a debt settlement proposal to their creditors. IPTO will assist to facilitate their discharge where possible. I think these points also answer the questions raised by Mr Pritam Singh.

On regulating the Internet, Mr Hri Kumar Nair touched on laws to regulate online conduct. He spoke about updating our laws, for example, the Penal Code, to better address anti-social behaviour taking place on the online space. The basic principle is clear – the same standards of what constitutes anti-social behaviour and other unlawful conduct should generally apply both in the physical world and in cyberspace.

The Member referred to the Computer Misuse and Cybersecurity Act, the regulation of online news sites, and the Penal Code.

The Computer Misuse and Cybersecurity Act was reviewed and updated in 2013. The amendments enabled us to take more timely and effective measures against cyber attacks that may threaten our national security, essential services, defence or foreign relations. The approach is no different to how we deal with national security threats in the physical realm.

With regard to the regulation of online news sites, the standards and safeguards in place, under guidelines by MDA, ensure that online news websites publish responsibly. These issues really relate to MCI and MDA, which

Page: 110

will be best placed to answer them.

On the Penal Code, the Government updated the Penal Code in 2007 to reflect advancements in technology and the changing crime trends. Amendments were made to numerous provisions, including two provisions which the Member spoke about. Sending an SMS message containing an incitement to violence or counselling disobedience to the law would amount to an offence under section 267C, and section 367E of the Penal Code targets sex predators prowling online chatrooms and social media for young prey. Another example is making statements on blogs with deliberate intention to affect or wound religious or racial feelings of any person. That would be criminalised under section 298 of the Penal Code.

To facilitate the judicial fact-finding process for crimes involving use of computers and the Internet, in 2012, the Evidence Act was updated to facilitate admission of electronic records. But I accept the hon Member's basic point that as technology advances, we need to relook and make sure that the law keeps pace with the criminal conduct made possible by technology, and perhaps, we are already behind. So, I accept that, but as these matters are primarily under MHA, I will send to MHA the Member's substantive points – it is either MCI or MHA.

The Senior Minister of State will take the remaining cuts.

Mdm Chairman, I will deal with the remaining cuts. Mr Hri Kumar asked how MinLaw is supporting our Singapore Law Practices (SLPs) venturing abroad. SLPs are an important pillar of our legal services sector. SLPs employ more than 90% of Singapore-qualified lawyers. Through their practice, legal knowledge and skills, they facilitate access to justice and the rule of law, uphold our legal system, contribute to the development of Singapore law and jurisprudence, drive the development of our legal profession, and support the growth of our economy.

We want our SLPs to do well and to grow not only in terms of depth and breadth of expertise, but also to expand regionally. There are good growth opportunities for SLPs locally as well as in the region.

We would like to help SLPs who are looking to capture opportunities overseas to grow and become regional leaders. The market for legal services in Asia is expected to grow with the increase in trade and investments in this part of the world. Our SLPs are in a good position to compete successfully. Our top

Page: 111

four SLPs are already the largest law firms in ASEAN.

There are existing incentives and assistance schemes in place to support SLPs. First, IE Singapore's Double Tax Deduction for Internationalisation (DTDI). Under this scheme, SLPs may deduct against their taxable income, the expenses for overseas business development trips and overseas investment study trips. Second, there is the Development and Expansion Incentive for International Legal Services (DEI Legal), administered by EDB. Law firms, which are structured as companies and which provide international legal services from Singapore, can get a 10% concessionary tax rate for income derived from such services under this incentive scheme, subject to EDB's approval. There are also other schemes administered by IE Singapore and EDB, depending on needs and strategies of different SLPs.

I would encourage the Singapore law firms to take advantage of such schemes. Any expansion into regional markets must be done in accordance with their laws. The key is in understanding those countries' rules, in terms of allowing foreign firms to do business in their jurisdictions. Some may allow law firms to operate through different vehicles such as partnerships, corporations or joint ventures. Others may do so through licensing regimes. It is not always necessary to have a physical presence or office in the foreign country. It is possible for SLPs to provide legal services out of Singapore to regional clients. In this scenario, what is important is access to potential clients and having a strong Singapore legal services brand so that such clients will automatically think of SLPs when they need legal services.

MinLaw is also helping SLPs to better understand markets in the region through various means. For example, with respect to Myanmar, which is a growing and potential market, we invited the Director-General of Myanmar's Union Attorney-General's Office to speak at a seminar co-organised with the Law Society of Singapore. SLPs were briefed on Myanmar's legal and business landscape as well as their legislation regulating foreign investments. We are now also working with the Law Society to plan seminars in Yangon and Nay Pyi Taw. These will be useful opportunities for SLPs to meet potential partners and clients in Myanmar.

In addition, we will continue to support efforts of SLPs to improve productivity and develop new capabilities for the domestic and regional growth. In his Budget speech, Deputy Prime Minister Tharman announced the extension of the Productivity and Innovation Credit (PIC) Scheme for another three years. The PIC extends to law firms as well. Law firms can utilise the PIC for their training of lawyers and to acquire systems or technology which improve their

Page: 112

productivity or to run their practices more effectively, for example: IT systems, document management systems, accounting systems, client relationship management systems and other automation systems. This would also include, for example, information technology devices such as iPads. In 2012, over 230 SLPs benefited from the PIC, obtaining more than $20 million worth of PIC enhanced deductions. We encourage SLPs to leverage on this scheme, as well as other schemes administered by SPRING Singapore to support their growth.

Besides the SICC, SIMC and schemes to support SLPs, we are also looking at ways to develop the in-house legal counsel sector in Singapore, especially where such jobs carry regional responsibilities.

The in-house legal counsel sector creates good jobs and provides alternative career pathways for Singapore-qualified lawyers. As the interface between business and the legal service industry, the in-house legal counsel sector creates spin-offs to our legal services industry, including SLPs. In 2012, we amended the Evidence Act to extend legal professional privilege to in-house legal counsel. In-house counsel may enjoy this privilege if they are employed for the purpose of giving legal advice and the communications for which privilege is claimed relates to matters of legal advice. This has made it more attractive for international companies to establish their regional in-house legal departments in Singapore.

In June this year, MinLaw will also be supporting the Singapore Corporate Counsel Association to organise the In-house Counsel World Summit. This will be the first time this event is held in Asia. The event will provide a platform for in-house counsel worldwide to discuss the latest global trends and legal issues that affect business activity, particularly in the Asia Pacific. It will be an important platform for networking and connecting. We will continue to study other ways to expand the in-house counsel community in Singapore.

Our moves to strengthen the local legal scene in Singapore have also been about ensuring even better access to justice, better protection for the vulnerable and equitable outcomes for all.

Mr Lim Biow Chuan and Mr Zainal Sapari highlighted concerns over the moneylending landscape in Singapore, particularly, excessive borrowing and excessive borrowing costs.

In regulating the moneylending industry, we have to maintain a balance between allowing borrowers reasonable access to credit, and providing them,

Page: 113

especially those with lower income, with adequate protection. We are cognisant that some borrowers turn to moneylenders in desperation and this makes them vulnerable to exploitation.

To this end, there are various safeguards in the law such as borrowing caps for unsecured loans as well as interest rate caps. The existing borrowing caps for unsecured loans from moneylenders protect borrowers earning an annual income of up to $120,000, while the existing interest rate caps for moneylending loans apply only to borrowers earning less than $30,000 a year.

When we set interest rate caps, there are competing considerations involved. If the cap is set too low, it would be commercially unviable for licensed moneylenders to service borrowers with high credit risk. This would force borrowers to turn to loan sharks to meet their financial needs. If the cap is too high, borrowers will be overcharged by moneylenders. It is therefore necessary to find the right balance.

At present, moneylenders may also charge a variety of fees, if the borrower has agreed for these fees to be charged at the time the loan is taken. Such fees include fees for late repayment of principal or late payment of interest and fees for early redemption or termination of the loan. However, these fees can escalate for the borrower.

My Ministry is reviewing the moneylending regime. We are considering measures to address the issues raised by Members. To this end, we are reviewing the interest rate cap and considering whether there should be further restrictions on the charging of fees by moneylenders.

As for borrowing caps for unsecured loans from moneylenders, the current regime only regulates the amount that an individual can borrow from each moneylender. We intend to establish a Central Credit Bureau that will enable tighter controls over the total amount of unsecured credit which an individual can borrow from moneylenders, that is, a "universal cap".

Mr Zainal asked about restrictions in the number of moneylenders in any given housing estate. At present, we have not imposed any limits on the number of moneylenders in any geographical location, but this is something that we are studying.

We are looking at the statistics on the concentration of lenders and borrowers. However, geographical restrictions may have limited effectiveness

Page: 114

in a small country like Singapore. Our size is such that travelling costs may not deter borrowers from going to moneylenders in different parts of the island. As part of our review, we intend to consult key industry stakeholders, including organisations that provide counselling to distressed borrowers and the moneylending industry, amongst others. I cannot overstate the importance of striking the right balance and we will announce the measures in due course.

Turning to Ms Sylvia Lim's cut, she had suggested reforms to allow victims of crime to attach civil compensation claims in criminal proceedings so that separate civil suits need not be filed, although I think that in case, Ms Lim did accept that for complex matters or things where there are issues heavily in dispute, those would be suitable for civil claims. I think that is in line with the judgment of Chief Justice Chan Sek Keong, as he then was, was in Public Prosecutor vs AOB [2011] 2 SLR 793.

Presently, section 359 of the Criminal Procedure Code allows for claims for compensation in criminal proceedings. That section makes it mandatory for a court convicting a person of any offence to consider whether a compensation order should be made, and the court will make such compensation orders where appropriate.

I think Ms Lim's point was whether or not one could have a simple joining procedure where you attach a civil claim to that criminal case. There is some difficulty in attaching a civil claim to a criminal claim because it is not just a simple matter of tagging a civil claim on. There are issues that have to be thought through carefully. Relevant considerations will include the different purposes that civil and criminal proceedings generally serve, the different burdens of proof in such proceedings, the different legal and factual issues that may arise in criminal proceedings from those in civil proceedings and vice versa, and the different types of evidence that may be required to establish the civil compensation claim and the criminal offence.

I think what is key here is that the law, as it currently stands, gives the victim the right or the ability to claim for compensation in the criminal proceedings. Our courts are actually required in every case to consider whether compensation should be given. I think Ms Lim's concern really is the ease with which the victim can claim, and whether or not the victim is able to have the issues put before the Court in a way that will enable the claim for compensation to be determined. We will certainly look and see whether more can be done to enable the victims to make claims under the existing section 359. In fact, our approach of requiring the Court to consider whether compensation should be ordered in the criminal case, in some ways makes it even easier and better for

Page: 115

the victims.

Finally, Mr Pritam Singh called for a review of the Coroner's Act. The purpose of a Coroner's inquiry into the death of a person is to inquire into the cause of and circumstances connected with that death. The crux of the issue raised by the Member is this: should a Coroner's inquiry be forced to continue in certain cases, without the Coroner having any discretion on the matter, even though a finding has already been made in criminal proceedings as to the cause of and the circumstances connected with that death?

The Coroner's Act was enacted in 2010 and came into effect in 2011. Section 39 of this Act gives the Coroner the discretion to discontinue proceedings before him if he determines that the inquiry is no longer necessary to determine the cause of and circumstances connected with the death, that is, the Coroner can decide whether to continue the proceedings or discontinue the proceedings.

In exercising his discretion, the Coroner may have regard to the wishes of the next-of-kin of the deceased. In practice, if counsel for the next-of-kin is present, the Coroner would take the views of the next-of-kin on board, through counsel. So, discretion is given to the Coroner, and if the counsel for the next-of-kin agrees to the discontinuance, then the question arises: how is the public interest served by insisting that the Coroner must continue with the inquiry, particularly, where all the facts have come across? It does not make sense, in such a situation, to take away the Coroner's discretion and to force him to continue with the inquiry.

So, the question is, should we trust the Coroner to consider what is appropriate in each case? Or do we make it mandatory for the Coroner to continue? I think we should trust the Coroner and let it be discretionary. Our position is generally similar to that in the United Kingdom and New South Wales, Australia.

Madam, in conclusion, I would say MinLaw advances access to justice and the rule of law through all that we do. We will continue to review and enhance our laws to safeguard the rights of Singaporeans, strengthen the people's trust in Government, and the global community's trust in Singapore.

Thank you, Madam, just two clarifications; in fact, two requests. First, I would be grateful if the Minister or the Senior Minister of State could give an update on the third law school and where we are on that. And second, on the issue of moneylending regulations, I welcome the review that is going to come up. One of the reasons why moneylenders are prepared to lend to those with lower credit is, of course, the higher interest rates and returns, and also the fact that they are able to employ more robust enforcement method to recover the debt which banks normally do not. As part of the review, would the Ministry also consider looking at regulations in relation to how moneylenders seek to recover their debt?

Mdm Chair, Mr Hri Kumar asked about the third law school. The current status is that the third law school will be situated within UniSIM. The idea for the third law school is to be an applied law school meaning there should be a strong nexus with practice. We want the graduates of that law school to have not only a very strong theoretical foundation but also a strong practice-orientated teaching in their education.

The current status is that a Steering Committee has been set up, which I chair. The Steering Committee is looking into issues such as the curriculum of the third law school, admission criteria, staffing as well as all the other different facets that will go into the setting up of the third law school. The report will be out, hopefully, by the end of this year.

I would like to thank the Minister for reconsidering the bankruptcy regime. I look forward to the changes. The clarification that I have to ask really is on the Singapore International Commercial Court. One of the concerns raised was the enforceability of judgments they are under. Are there any plans to expand the number of countries covered by the reciprocal enforcement of Foreign Judgments Act which might be helpful in this regard?

Mdm Chair, it is really, of course, not within our control to increase the number of countries. Each country will have to decide by itself. I think what would make a significant difference is if the EU accedes to the Choice of Court Agreements Convention that I referred to, and we too accede to this Convention, together with the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act (REFJA), I think we will get pretty good coverage. But parties will have to make an assessment of enforceability when they choose a jurisdiction. We believe that there will be enough parties who would be interested in coming, particularly because they will also take into account issues

Page: 117

of enforcement when they voluntarily agree with each other to come to Singapore.

Thank you, Madam. Some of my residents who are indebted to licensed moneylenders see their interests accumulating on a day-by-day basis. I want to ask the Minister: when will the review on this cap of interests chargeable as well as the fees chargeable be done? Can it be done expeditiously so that borrowers have a greater sense of certainty as to how much interests they have to pay? The other query that I have for the Senior Minister of State is: what are the penalties being considered against licensed moneylenders if they behave like unlicensed moneylenders who use harassment techniques to collect back loans?

Madam, with respect to the Member's question as to when the review will be completed, as I indicated earlier, there are a number of stakeholders that we have to consult. So, it is not possible to give a definitive date, but what I can assure the Member is that it will be done as expeditiously as possible.

With respect to the second question of what happens when a licensed moneylender behaves like an unlicensed one and crosses the line, the short answer is that if they cross the line and they breach the law, then, of course, they will be dealt with in accordance with the law. If they commit an offence in the course of pursuing their claim for recovery of the loan, then they will be prosecuted for that offence.

Thank you, Madam, for letting me deal with this question as well. Underlying all these questions on moneylending is this: can we do something? I have tried to explain this a number of times before. If we can take care of all the moneylending issues through legislation, we would have done that long ago. It is not a question of us saying, "Okay, we impose caps on this, we do this, we do this, we do this", and the problems go away. You are then going to see them going underground and the unlicensed moneylender problem will shoot up. At the end of the day, you have a problem when people need money for whatever reason, sometimes good, sometimes bad. Then, they are desperate and they will do whatever is necessary to go and borrow the money.

Page: 118

So, let us deal with that. The problem is not the law. The problem is not the lack of caps. Caps can help if it is not a real market. If it is a fixed market, and we impose caps, it can help. But if there is a real market out there and after an assessment of risks, this is the interest that has to be charged, if you impose an artificial curb, the borrower and the lender will find alternate means and they will be driven underground. We used to have a huge unlicensed moneylenders problem in the past. So, we have been imposing curbs, we have been reviewing it and the reason why we are cautious is that the real nature of the problem has to be understood.

The last time round, when we introduced a whole series of curbs, there were a number of points made – some publicly in Forum letters – that this is going to drive people underground. So, it is a balance, but we have to try and protect the borrowers, and we will.

Clarification for the Senior Minister of State regarding my cut. I am glad that she acknowledged that the Ministry could do more to look into the area of "justice for crime" victims. She mentioned in her answer that victims could use the existing section 359 of the CPC to apply for compensation. But from previous parliamentary answer and also my understanding, the prosecutor is usually the one that applies to court on behalf of the victims. So, I would like to ask a clarification on whether, really, it is the prosecutor that is the gatekeeper of that application for compensation. Is there any way to empower the victim to have a direct route to apply to the court? That is why I brought up the joining procedure.

The second clarification is, based on earlier statistics, section 359 does not seem to be invoked very frequently. I wonder if the situation has improved or whether the Senior Minister of State can shed any light on the frequency of usage of that section.

I thank the Member for clarifying. I think the Member's understanding is correct. It is done through the prosecutor. What I intended to convey in my reply was that we are prepared to consider ways in which the victim can work with the prosecutor so that the claims can be brought to Court. With respect to the numbers, I do not have the numbers specifically with me at the present time, but perhaps the Member might like to file a question on the statistics and I can arrange for the numbers to be provided.