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deficit from the $6.45 billion Budget sur-
INBRIEF
Partnership Bill for
passive investors
THE Limited Partnerships Bill
passed in Parliament yesterday will
cater to investors who prefer a
more passive role in a business,
leaving its management to other
partners, in return for limited
liability.
The LP Act is not to be confused
with the Limited Liability
Partnership (LLP) Act, which gives
all partners in the company limited
liability. The LLP Act was passed
in 2005.
The Act passed yesterday is
likely to appeal to those interested
in private equity and fund
investment businesses, according
to a study done by the Ministry of
Finance.
A general partner in a limited
partnership will have management
control and also be personally
liable for all debts and other
liabilities incurred by the
partnership.
Limited partners are prohibited
from participating in the
management of the business. They
can, however, consult with and
advise the partnership or its
partners with respect to its
business, affairs or transactions.
A limited partner can also
investigate, review, approve or
advise on the accounts or affairs of
the partnership.
Property tax to cover
cables, pipelines
THE Property Tax Act was
amended to require owners of
structural networks, such as
pipelines, cables and railway lines,
to pay the tax.
This includes pipelines and
cables which pass through lands
which the network owner does not
own.
A High Court decision in May
last year had ruled that a company
did not have to pay property tax on
its pipelines.
The amendment will come into
force by Jan 1 in time for the next
billing cycle for property tax.
Shares and property
transfers speeded up
OWNERS of shares and property
who transfer them to another
person will no longer need to get
the taxman to value the assets.
They just have to declare the
value to the Inland Revenue
Authority of Singapore (Iras).
The change was given the nod
by Parliament yesterday when
lawmakers passed the Stamp
Duties (Amendment) Bill.
Explaining the benefit of the
amendment, Mrs Lim Hwee Hua,
the Senior Minister of State for
Finance, said: “With the removal
of mandatory adjudication,
taxpayers can enjoy a faster
transfer process and save on the
adjudication and valuation fees.”
She also gave the reasons for
getting rid of the requirement.
First, gifts involve mostly
Housing Board (HDB) flats. The
values of these can be ascertained
through the HDB’s valuation
reports.
Second, most property transfers
have third-party valuation reports,
which help prevent
under-reporting of their values.
Third, the value of shares can be
calculated based on a company’s
audited accounts, or if it is listed,
the prices at which they are traded.
20,000 more childcare places by 2013
BY SERENE LUO
TWO HUNDRED more childcare centres
will be ready in about five years’ time,
100 more than what was announced earli-
er in March.
By 2013, Singapore will have 940 cen-
tres with 83,000 places, an increase of
about 30 per cent from the 63,000 places
in 739 childcare centres now.
Minister of State (Community Develop-
ment, Youth and Sports) Yu-Foo Yee
Shoon gave this update yesterday in Par-
liament, responding to Madam Halimah
Yacob (Jurong GRC) who had asked about
the quality, supply and affordability of
childcare centres.
The availability of affordable and quali-
ty child care is a perennial issue as more
families have both parents working, and
more people seek early childhood develop-
ment services for their children.
The new centres will be “in HDB es-
tates and near transport nodes to make it
even more accessible and convenient for
Budget deficit: Triple
the $800m estimated
Higher infrastructure
costs, lower revenues
among causes: Tharman
BY GOH CHIN LIAN
THIS year’s Budget deficit is set to bal-
loon to over $2.4 billion, triple the $800
million estimated by the Government in
February.
Higher infrastructure costs, additional
spending on measures to encourage more
Growth of credit card
loans – up 19 per cent
– has been “fairly
significant’’.
ST FILE PHOTO
Govt to keep an eye
on rising credit card debts
FEARS that the growth in consumer loans
was fuelling a credit bubble were dis-
missed by Finance Minister Tharman
Shanmugaratnam yesterday, but he said
the situation will be monitored.
Mr Tharman told Parliament that con-
sumer loans rose 10 per cent in Septem-
ber compared with the same month last
year, largely in line with economic
growth and the property boom. Total con-
sumer loans amounted to about $112 bil-
lion as at Sept 30.
But he said the “fairly significant
growth” of credit card loans – up 19 per
cent in September over last year –
“should be watched carefully”.
Credit card debts increased in absolute
amount by $840 million from September
last year to this September, which may be
in line with economic growth and greater
card use, but the Government believes a
Timely update for moneylending rules
BY LIM WEI CHEAN
EVEN as Parliament approved a new Mon-
eylenders Act yesterday, MP Ellen Lee
wondered if the timing was right, given
the current credit crunch as it could
prompt more people to seek loans.
But Senior Minister of State (Law and
Home Affairs) Ho Peng Kee gave his assur-
ance during the debate that regulations
were being tightened.
The new law eased some existing re-
strictions on advertising, methods of loan
disbursements and collection of pay-
ments, as well as interest rates.
It also expands powers of the Registry
of Moneylenders, giving it the ability to
refuse, revoke or suspend a licence.
Borrowers also get greater protection.
New rules require moneylenders to make
parents”, Mrs Yu-Foo said.
The sites for them will be released in
stages, she added.
With the extra centres, competition
will likely increase and that will help keep
fees affordable, she added.
Childcare fees have been on the rise re-
cently, owing to factors such as higher
costs of living and higher educational re-
quirements for teachers.
The challenge, said Mrs Yu-Foo, is
“not in the hardware, but in attracting
people” to work as childcare providers.
Madam Halimah had said the quality
of childcare centres depended on the qual-
ity of their staff, but low salaries often
made it difficult for the centres to attract
better staff.
Mr Zainudin Nordin (Bishan-Toa Pay-
oh GRC) also asked if there were plans to
improve the image of childcare staff.
Mrs Yu-Foo said some time was need-
ed to improve their image despite the Gov-
ernment giving bigger subsidies and set-
ting higher training criteria.
babies, and lower revenues collected were
among the reasons Finance Minister Thar-
man Shanmugaratnam cited for the larger
deficit.
He was replying to a question from
Nominated MP Gautam Banerjee, who
wanted to know whether estimates in the
Budget presented to Parliament in Febru-
ary need to be revised in light of the glo-
bal financial crisis.
The official forecast then: gross do-
mestic product growth at 4 to 6
per cent, and inflation
at 4 to 5 per
cent.
closer watch is warranted.
“The Monetary Authority of Singapore
(MAS) is monitoring this, but as of now
there is no serious cause for concern and
we will stay in touch with the banks,”
said Mr Tharman.
MP Seah Kian Peng (Marine Parade
GRC) had earlier asked whether the
growth of personal debt over the past 12
months warranted a review of the eligibili-
ty criteria for personal credit lines.
Mr Tharman responded by saying that
the rules laid down by the MAS were
stricter than in most other countries.
Credit card applicants must have an an-
nual income of $30,000 and the maxi-
mum credit limit is capped at twice the us-
er’s monthly income. Other unsecured
credit loans are capped at twice a borrow-
er’s monthly income.
Mr Tharman said: “We would be con-
terms and conditions known upfront,
have loan contracts and explain these to
borrowers in a language they understand.
They must also ask borrowers about
other loans they have – a requirement
which ensures borrowers do not over-ex-
tend themselves by taking multiple loans.
Penalties against harassment by loan-
sharks now also extend to cover not just
those involved in the act of harassment,
but to those who instigate them to act.
Associate Professor Ho said the chang-
es to the Act, which was enacted over 50
years ago, aim to place the industry on a
firm and modern setting and ensure that
moneylenders conduct themselves in a
fair and transparent manner.
MPs Ellen Lee (Sembawang GRC) and
Fatimah Lateef (Marine Parade GRC) sup-
ported the changes but asked about the
impact on the industry.
The new childcare centres will be “in HDB estates and near transport nodes to make it even more
accessible and convenient for parents”, said Mrs Yu-Foo. ST PHOTO: LIM WUI LIANG
THE STRAITS TIMES WEDNESDAY, NOVEMBER 19 2008 PAGE B4
These have since been revised to 3 per
cent growth and above 6 per cent infla-
tion.
Mr Tharman, however, gave the assur-
ance that the larger-than-expected defi-
cit would be no cause for worry.
“We are not seeking to reduce this
deficit, either by trimming government
expenditures or raising additional
revenues,” he said, adding that such a
deficit was appropriate “in the con-
text of an economy that has en-
tered a slowdown”.
The Government will
be able to fund the
cerned if financial institutions are lending
without regard for credit standards and
risk assessment, and borrowers are taking
credit without considering if they can af-
ford it.”
But he added that the MAS rules and
criteria used by financial institutions
meant sound lending standards were in
place in Singapore. Most of the growth of
consumer loans was due to mortgages –
no surprise “given the buoyant property
market in 2006 and 2007”, he said.
Other forms of secured credit like car
loans increased “marginally” while share
financing had fallen, he said. The total
amount outstanding on credit and charge
cards rose over the past year, but this was
consistent with growth in previous years,
he added. The rise also reflected the in-
creased use of credit and charge cards.
ROBIN CHAN
They also wanted to know how the au-
thorities would ensure moneylenders did
not take advantage of borrowers, and
how illegal moneylending or loanshark ac-
tivities would be dealt with.
On Ms Lee’s concern that people might
let their guard down and borrow blindly
because of the credit crunch, Prof Ho said
that in such times, licensed moneylenders
would also be more risk-averse and cau-
tious in lending.
And while advertising rules have been
relaxed, this did not mean an easing-up
on the industry. Restrictions do apply.
Moneylenders cannot place advertise-
ments or material which are false or mis-
leading, or which induce people to bor-
row for “inappropriate purposes”.
On harassment , he said moves like ex-
tending caning to those who instigate
such acts are aimed at tackling the “ loan-
sharking scourge”.
plus in the last financial year ending
March 31, “when we had unexpectedly
higher revenues”, he said.
Economists interviewed by The Straits
Times were unanimous that the deficit
would not be a problem for Singapore.
Associate Professor Choy Keen Meng
of Nanyang Technological University
(NTU) noted that what was more impor-
tant was keeping national budgets
balanced over an entire business cycle,
rather than in individual phases.
NTU economist Tan Khee Giap expect-
ed an even larger deficit next year as
Singapore faces a slowdown in at least
four major export markets: the United
States, Europe, Japan and China.
As unemployment rises, he expected
the Government to introduce measures to
ease people’s pain.
Noting that the Government’s ability
to finance the deficit this year and likely
next year is a reminder not to take for
granted the years of surplus, Dr Tan said:
“After Singapore recovers in 2011, the
Government must go back to its old pru-
dent budgetary approach so as to prepare
all of us for the next crisis or emergency.”
chinlian@sph.com.sg
Govt won’t
let good
businesses
go down
BY ROBIN CHAN
THE Government will soon enhance
schemes to help cash-strapped business-
es secure bank loans, Finance Minister
Tharman Shanmugaratnam said in Parlia-
ment yesterday.
This is to avoid a scenario where good
businesses are forced to close down ow-
ing to a lack of access to credit, he said.
Mr Tharman said the new measures
will enhance existing loan schemes, and
will mostly involve the Government shar-
ing the risk of the loans with the banks.
Prime Minister Lee Hsien Loong had
said on Sunday that with a protracted eco-
nomic slowdown looming, some meas-
ures to help businesses and workers
would be announced this week.
Yesterday, Mr Tharman told MPs that
while total bank lending to non-bank cus-
tomers has continued to grow in the 12
months to September, some credit tight-
ening is “inevitable” given the current
economic downturn.
“The Monetary Authority of Singa-
pore’s assessment is that while there is
no large scale credit crisis in Singapore,
some segments of borrowers may face
higher borrowing costs.”
With recent feedback showing that
banks had stopped lending to some busi-
nesses, MP Lee Bee Wah (Ang Mo Kio
GRC) asked: “Is there any channel that
businesses can turn to should this really
happen at the ground? Because we would
not want to see good businesses being
killed prematurely.”
In response, Mr Tharman said: “I quite
agree with Ms Lee that we would not
want to see good, viable businesses,
which are the majority, having to cease
business or scale down significantly... be-
cause of a lack of access to credit.
“So the Government has been study-
ing this carefully, taking in feedback, and
will be making announcements soon on
the enhancement of loan schemes which
involve risk sharing with the banks so as
to ensure that we maintain access to cred-
it on the part of our companies.”
In terms of the interbank market, in
which banks lend to each other, he told
MPs that there has been “sufficient liquid-
ity in the system”.
“We have not seen the market freeze
up, as happened in some other global fi-
nancial centres in recent months. Banks
have been able to obtain Singapore dollar
funding among themselves in an orderly
manner.
“We are unlikely to see this (tightening
of bank credit) happen on the scale that is
occurring in many other parts of the
world, where banks are tightening credit
not only because of increased risks that
they perceive in a downturn but because
they are short of capital.”
In fact, as at Sept 30, total bank lend-
ing to non-bank customers was still grow-
ing, he said.
Loans to the building and construction
sector increased by about 50 per cent in
the 12 months to Sept 30, compared with
the same period last year.
He said small- and medium-sized en-
terprises have lifted their use of existing
schemes significantly, citing that the
amount of loans under both the local en-
terprise finance scheme and the loan in-
surance scheme grew by more than 55 per
cent in the first eight months over the
same period last year.
He added that it would be inappropri-
ate for the Government to direct banks to
lend or to get involved with to whom
they should lend.
“These are commercial decisions
which banks themselves have to take,
based on their assessment of the risks as
well as the relationships they maintain
with their customers... Our banks make
these assessments carefully, and take into
account both the short-term risks and
their long-term interests in keeping their
customers. We should continue to leave
these decisions to them.”