Legislation

New Bills

Enlistment (Amendment) Bill 2003 (B11/2003) 

Section 20 of the Enlistment Act (Cap 93) will be amended to provide that a regular serviceman sentenced by a subordinate military court to a discharge with ignominy or dismissal shall be deemed to be discharged from regular service in certain circumstances.

Section 27 will be amended to provide that, in computing the period of service of a national serviceman or a regular serviceman, no account shall be taken of any period during which he was under close arrest on a charge for an offence of which he was subsequently convicted.

Police Force (Amendment) Bill 2003 (B12/2003)

This Bill seeks to amend the Police Force Act (Cap 235) to provide for the deployment of air marshals on board certain Singapore aircraft.

New s 48C empowers the Commissioner of Police, where he has reason to believe that any passenger flight to be performed by a Singapore aircraft presents high security risks, to require the operator of that aircraft to permit the deployment of one or more air marshals on that passenger flight.

New s 48D confers on police officers serving as air marshals on board any Singapore aircraft during a passenger flight, while the aircraft is in flight elsewhere than in or over Singapore, the same powers, rights and immunities, and requires them to perform the same duties, as when on service in Singapore. The section also provides how an arrested person may be dealt with by an air marshal.

Singapore Workforce Development Agency Bill 2003 (B13/2003)

The Singapore Workforce Development Agency Bill 2003 seeks to establish and incorporate a new public corporation to be called the Singapore Workforce Development Agency (the ‘Agency’) and to transfer to the Agency the functions, property, liabilities and employees of the departments within the Human Capital Development Division and the Labour Market Development Division of the Ministry of Manpower, and the Skills Development Fund Secretariat, the Critical Enabling Skills Training (‘CREST’), Secretariat and the National Skills Recognition System (‘NSRS’) Centre of the Standards, Productivity and Innovation Board.

New Subsidiary Legislation

Economic Expansion Incentives (Relief from Income Tax) (Qualifying Activity) Regulations 2003 (S302/2003)

Pursuant to Part III of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86), a company engaged in a qualifying activity may apply to the Minister for Finance for approval as a pioneer service company and avail itself of the tax benefits given to pioneer service companies. The qualifying activities are listed in s 16 to include ‘such other services or activities as may be prescribed’. For the year of assessment 1999 and subsequent years of assessment, these services or activities have been prescribed in the Economic Expansion Incentives (Relief from Income Tax) (Qualifying Activity) Regulations 2003 as follows:

• services and activities which relate to the provision of entertainment, leisure and recreation;
• publishing services;
• services which relate to the provision of education;
• medical services;
• services and activities which relate to agricultural technology;
• services and activities which relate to the provision of automated warehousing facilities;
• services which relate to the organisation or management of exhibitions and conferences;
• financial services;
• business consultancy, management and professional services;
• services and activities which relate to counter trade, including barter, counter purchase, and compensation or buy-back;
• services and activities which relate to international trade;
• venture capital fund activity;
• operation or management of the rapid transit system known as the Mass Rapid Transit System;
• services provided by an auction house; and
• maintaining and operating a private museum.
  

Pursuant to Part IIIB of the Economic Expansion Incentives (Relief from Income Tax) Act, a company engaged in a qualifying activity may apply to the Minister for Finance for approval as a development and expansion company and avail itself of the tax benefits given to such companies. The qualifying activities are listed in S 19I to include ‘such other services or activities as may be prescribed’. For the year of assessment 1999 and subsequent years of assessment, such service or activity have been prescribed in the Economic Expansion Incentives (Relief from Income Tax) (Qualifying Activity) Regulations 2003 as follows:

• services and activities which relate to ship management, ship agency, logistics and freight forwarding.
  

The Economic Expansion Incentives (Relief from Income Tax) (Qualifying Activity) Regulations (reg 2) are revoked.

Employment (Recommendations for Annual Wage Adjustment) Notification 2003 (S303/2003)

The Government has accepted the recommendations made by the National Wages Council (‘NWC’) for wage adjustments for the period commencing on 1 July 2003 and ending on 30 June 2004 (both dates inclusive). These recommendations, which may be adopted by an employer to adjust the wage of an employee for the aforesaid period, are as follows:

• Wage cut for SARS affected industries to save jobs. In view of the severe impact of SARS on the economy, the NWC recommends that companies directly affected by the SARS outbreak implement appropriate wage cuts to survive this downturn and to save jobs. NWC urges management and executives to take the lead, for example by taking earlier or deeper wage cuts.
• Wage restructuring for companies facing difficult industry conditions. Such companies should restructure their wage system without delay, reducing the fixed and seniority-based elements of pay, and converting them to productivity and profit-sharing bonuses. This will have to go significantly beyond transferring 2% from the basic wage into the Monthly Variable Component (‘MVC’).
• Wage freeze for most companies. Companies that are not directly hit by SARS but nevertheless are affected by the generally uncertain business conditions should continue with the wage standstill. The majority of companies in Singapore would fall into this category. These companies should also proceed to restructure their wage system and build up the monthly variable component as soon as possible by transferring 2% or more from the basic wage into the MVC.
• Bonuses for companies doing well. A few companies are still doing well, despite the generally difficult economic climate. They should reward their workers through appropriate variable payments or special bonuses.
• Restructuring Wage System for Competitiveness. The Economic Review Committee (‘ERC’) recommended that companies top up their MVC to 2% immediately out of their basic wages. The NWC supports this.
  

All companies with seniority-based wage systems need to replace them with the Competitive Base Wage System (‘CBWS’) recommended by the ERC and endorsed by the Government. The CBWS rewards workers based on the value of the jobs, their contribution, productivity, and the performance of companies.

The NWC strongly urges companies and unions to speed up wage restructuring by narrowing the salary maximum/minimum ratio to an average of 1.5 or less, to better reflect the value of the job. They should also implement appropriate measures for employees whose salaries exceed the maximum point in the desirable salary ratio achieved or brought about, for example by reducing or freezing the maximum of salary scales.

In this regard, the NWC proposes that the government set up a tripartite task force to drive the wage restructuring process and to report on its progress. The task force should complete its first report within six months.

• Portable Medical Benefits. The ERC recommended the introduction of portable medical benefits. Two schemes for inpatient medical benefits, namely the Portable Medical Benefits Scheme (‘PMBS’) and the Transferable Medical Insurance Scheme (‘TMIS’) have been proposed. The NWC strongly urges employers, in consultation with the unions/workers, to adopt either of the two schemes.
• Other Costs. The NWC strongly urges the government to continue to keep statutory costs and other charges down, as wage costs constitute only a part of the total cost of doing business in Singapore.
  

The NWC recommendations are applicable to all employees, management, executives and rank-and-file employees, unionised and non-unionised companies and in both the public and private sectors. In particular, NWC recommends non-unionised companies to also closely follow the recommendations.

These recommendations are applicable for the period 1 July 2003 to 30 June 2004 (both dates inclusive). However, in view of the rapid changes in the economic situation, the NWC will reconvene to review the wage guidelines as and when the situation warrants it.

Banking (Licence Fees) Notification 2003 (S306/2003)

With effect from 27 June 2003, the fees payable for a licence to transact banking business granted by the Authority under the Banking Act (Cap 19) for every year commencing on 1 April and ending on 31 March of the following year or part thereof shall be as follows:

In respect of a full banking licence

In respect of a wholesale banking licence

In respect of an offshore banking licence

A ‘limited purpose branch’ in relation to a bank in Singapore that has been granted a full banking licence, means a branch of the bank in Singapore at which the services provided are limited to:

1. accepting cash or cheques for payment into accounts already maintained with the bank;
2. in the case of applications for new accounts for which initial deposits are made by way of cheques, verifying identities of the applicants;
3. accepting cash or cheques as payment for bills for credit cards or other credit facilities;
4. providing automated teller machines, internet banking kiosks or other self-service facilities;
5. providing general assistance to customers in respect of the services referred to in sub-paragraphs (i) to (iv) and applications for electronic banking services;
6. carrying on money-changing business;
7. carrying on remittance business and as an incident thereto, the maintenance of accounts for remittance customers;
8. paying to any person in Singapore funds that are remitted in favour of the person from outside Singapore; or
9. any other service as the Authority may approve;
   

A ‘limited purpose branch’ in relation to a bank in Singapore that has been granted an offshore banking licence or a wholesale banking licence, means a branch of the bank in Singapore at which the services provided are limited to:

1. carrying on money-changing business;
   
2. carrying on remittance business and as an incident thereto, the maintenance of accounts for remittance customers;
   
3. paying to any person in Singapore funds that are remitted in favour of the person from outside Singapore; or
   
4. any other service as the Authority may approve;
   

The Banking (Licence Fees) Notification 2001 (S 217/2001) is cancelled.

Elizabeth Wong
Allen and Gledhill