COVID-19 (Temporary Measures) Bill

Order for Second Reading read.

3.19 pm

The Minister for Law (Mr K Shanmugam): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time".

As we start, Sir, I will sketch out the backdrop to the Bill, the reasons for state intervention in contracts – private contracts, we are intervening – and then I will deal with Parts 1 to 3 of this Bill.

I will add that this Bill is a little bit of a Noah's Ark, because it started with Parts 1 to 3 and it took about nine days from conception to delivery. But along the way, other Ministries have added various parts to it, so, my colleague, Senior Minister of State Edwin Tong, will deal with parts four and five, which deal with annual general meetings (AGMs) and the ability of Courts to hear matters online, virtually. That is at the request of MOF and the Supreme Court.

Minister Lawrence Wong will speak on property tax, which is in Part 6, and Minister Gan Kim Yong will deal with Part 7. MOH wanted certain orders to prevent further spread of the virus.

Let me now start with the backdrop to this Bill, Sir. I think Members will only be too familiar with the background – both the health situation and the economic situation. This is the most serious crisis this country has faced since Independence. Many around the world are describing this as the most serious crisis since the Second World War.

The human cost – in terms of deaths, infections, you look at Europe. The economic cost all over the world – in terms of jobs; economies, devastated; peoples' lives, ruined; businesses, shuttered; investments, wiped out. And the speed at which all of this has happened, has taken many by surprise.

If you look at Singapore on 18 February, the Deputy Prime Minister presented his Budget speech with a support package of $5.6 billion dollars – very substantive. At that time, there were 800 confirmed cases outside China. By 26 March, the situation had worsened. There was a second package presented by the Deputy Prime Minister – this time, $48 billion. And at that time, there were 410,000 infections and 18,000 deaths.

Eleven days later, the situation had worsened again. Yesterday, 6 April, the Deputy Prime Minister presented the third package to help Singaporeans. We had 1.2 million infections, more than 67,000 people dead. That is almost certainly an understatement of the true figures.

The virus is still tearing through the world. Africa and South Asia, so far, have not been badly hit and we can only hope that it stays that way.

The economic impact has been devastating. On 19 March, the Secretary-General of the United Nations said, a "global recession – perhaps of record dimensions – is a near certainty."

On 19 March, the International Labour Organisation (ILO) made an assessment that global unemployment could increase by 25 million. On 27 March, eight days later, ILO changed its assessment and said unemployment could be far bigger, far deeper, certainly more than 25 million.

Last week, the Director of the International Department of the People's Bank of China said, "The possibility of a 'Great Depression' cannot be ruled out if the epidemic continues to run out of control, and the deterioration of the real economy is compounded by an eruption of financial risks."

The Great Depression – the phrase itself brings to mind one of the most desperate periods that America and the world went through in the 20th century. Most of us know about the Great Depression only through books and economic studies. The era, the mood, that desperation have been vividly captured in literature by people like John Dos Passos, Steinbeck and others. The world has more resources, better understanding, tools, to avoid a similar Great Depression now, but the idea itself and what it can do to many people's lives is quite sobering, and the figures are grim.

In the last two weeks of March, 10 million Americans filed for unemployment benefits. In contrast during the 2008 to 2009 Global Financial Crisis, the global unemployment rose by about 22 million. So, you can see it in context.

The United Nations Conference on Trade and Development (UNCTAD) has said that the downward pressure on foreign direct investment (FDI) could be 30 to 40% this year and next year. Aviation has collapsed and as of 2 April, nearly 4 billion people – half of the world's population – were under some form of movement restriction. I think that does not include Singapore's figures, but that is probably a rounding error.

Other crises have affected economies. Spending goes down, businesses and jobs are affected, but a lot of activity continues. Here, it is a hard stop, immediate, by government orders to most economic activity, even movement of people – overnight as it were. So, the impact is that of economies literally falling off a cliff – in free fall. That is the difference between this slowdown and others.

And ours is a globalised economy and is especially hard-hit, with disruptions to the supply chain, flow of manpower. External trade is three times our internal economy. And, of course, large parts of the internal economy are also being closed down.

And the response to all of this, to such a serious shock, has to try and meet the challenges. So, we first had the three Budgets between 18 February and 6 April, close to $60 billion committed – 12% of our GDP. Wide-ranging measures – job protection, immediate cash to Singaporeans, measures to help stabilise businesses, including Government-supported loans. Second, on the banking and financial side, MAS has worked with the banks and announced a series of voluntary initiatives by the financial institutions – deferment of payments on mortgages; principal and interest, where the borrower wants it, can be deferred; other measures on credit flow to businesses as well.

This Bill is the third part of the response by the Government.

And before I deal with the provisions in the Bill, there is an important point of principle that should be set out and that is this: one of the foundations for our country is rule of law and there are several key aspects to this, including sanctity of contracts. Parties are free to organise themselves, enter into whatever contracts they want as long as they are not illegal. The general assumption is that the state will not intervene in such contracts. The reputation for upholding that is critical for Singapore as an international commercial centre with strong FDI.

So, for our financial, industrial and commercial sectors, the bedrock is really our reputation for rationality in Government policy, in economic management, integrity, absence of corruption, sanctity of contracts, court system and more. They are all threaded together to form what I would call one larger golden thread. You interfere with any of this, you risk unravelling the entire golden thread.

So, you do not lightly intervene. Yet, we are now seeking to intervene in private contracts to alter performance obligations. Why are we are intervening? Should we intervene? I will ask Members for forbearance because I will take some time on this. It is important that we understand the principles so that everyone, including investors, understand when and how we might intervene, both now and in future.

In order to look at the answers on principles of intervention, we can look at some situations when free market economies, which strongly protect the sanctity of contracts, have intervened. I go back to the Great Depression. Laws were passed by various American states: Iowa passed laws in 1933, 27 other states followed suit within the next 18 months.

The laws gave relief to mortgagors – a moratorium on mortgage foreclosures. And were retroactive, like our Bill.

This being America, the laws were challenged and went up to the Supreme Court, ended up in a famous case in 1934, Blaisdell, where the court gave a long judgment. But, if I can summarise into two points: the state has a duty to safeguard vital interests of its people; the state has the power to intervene, to safeguard the economic structure upon which the good of all depends. Strict enforcement of particular economic rights may not be desirable because of the damage that will cause to the whole economy.

Fast forward to the Global Financial Crisis 2008/2009, laws were passed in the US to provide protection to homeowners and renters facing foreclosure. Those laws expanded the mandatory 90-day grace period to holders of all types of home loans.

Third example, after Hurricane Katrina in 2005, Mississippi implemented a moratorium that altered creditors' ability to foreclose in the two-year period after the storm.

These are just some examples, there are many others from other countries. I have deliberately chosen examples from the US because it is often seen as the ultimate capitalist free-market economy, other than possibly Hong Kong.

So, the situation we have today, at this stage, appears to be worse than the Global Financial Crisis. I will summarise the principles in this way. The starting point is sanctity of contract, agreements must be kept: fundamental, basic, underpins our economy, free market. People must be able to make agreements and know that they will be upheld and enforced. That must almost be the unyielding principle and norm.

But freedom of contract is not an absolute. It has never been an absolute. There are two types of interventions. First, the law sets a framework, contracts are only valid if they do not breach that framework. The second, as we are seeking to do now, intervenes after the contracts have been entered into, to alter performance obligations.

For the first type of intervention, there are well-established exceptions in the law – not just in Singapore, but also in the UK, US, Australia, elsewhere for reasons of public policy. You see this in our law – Unfair Contract Terms Act, unlicensed moneylending contracts, other illegal contracts: they are not enforceable. Courts also have the right to invalidate contracts that have been entered into in that way.

Our intervention through this Bill is somewhat different. It alters obligations under contracts which have already been formed. I gave examples from the US to this House. Do we have examples from Singapore? I went back to take a quick look at our laws as to whether we have done something similar. The nearest equivalent I could find is the Frustrated Contracts Act passed on 22 January 1959, which applied retroactively to all contracts if the discharge was on or after 1 January 1959.

I was actually quite surprised that the then government had the time to do this given the general situation – the Malayan Emergency and dealing with, of course, a young and irrepressible Mr Lee in Parliament in Opposition, which was probably enough to keep them occupied.

The principles applicable for such retroactive legislation: one, the vital interests of the people are at stake, a significant part of the economy is at stake. Second, strict enforcement of particular contractual rights could damage the whole economy. Third, the state can intervene to use reasonable means to safeguard the economic structure for common good. And to this end, four, the state can take reasonable steps generally of limited duration.

Turning then to COVID-19, the Government has had to impose border constraints, direct most businesses to shut down, get their people to work from home, and if that is not possible, no work can be done. Imposing a whole variety of restrictions on travel and movement, these were not foreseeable. Their impact on the supply chain – many businesses could not procure the supplies they needed. The impact on flow of manpower – sectors that depended heavily on foreign manpower like construction were seriously affected.

The Singapore Contractor Association Limited (SCAL) said some sites are experiencing up to 40% shortage in workforce. The construction sector has shrank 4.3% in the first quarter of this year and nearly 23% as compared to the previous quarter.

At F&B outlets, footfall has dropped drastically. And according to one survey, nearly 80% will not last longer than six months, if the situation does not improve. We look at the tourism sector. Severe impact as well with hotel occupancy having fallen severely. Singapore Airlines has 96% of the fleet grounded. Taxi drivers, private hire drivers. In February, taxi drivers were reporting a fall in earnings of up to 30%. In March, they were reporting a fall of up to 50% to 60%.

Meanwhile, costs continue to run, rents have to be paid. For F&B outlets run by SMEs, rents could make up nearly 30% of their business cost and wages have to be paid as well. The earlier survey I cited on F&B outlets suggested that 80% were planning to reduce staff to cut costs.

In this situation, we cannot say leave it to the market, leave it to the contractual situation. It will be neither fair nor just. The bottom of the market has literally fallen off and the normal assumptions of business are gone. Every business should plan for some severe shock, but almost none could have prepared for this and if we do not intervene, the consequences would be that those in a position of advantage will make some money but most will suffer bankruptcies, insolvencies and complete destruction of the economic arena.

Lots of grief, lots of good companies and businesses going under. Even for those in a stronger position, many landlords do not really want to see their tenants go bust. If I can quote Andrew Lim, CFO of Capitaland Group, "Tenants and landlords are in a long-term symbiotic relationship. It is in our interest to see our tenants ride through this with us. We are all in this together because everyone in the eco-system has been impacted."

Yesterday's Business Times had a report – “the virus is turning Europe's retail apocalypse into a nightmare for landlords and lenders". The threat of the virus is not just to the retailers and restaurants. The ripple effect is across real estate and banking sectors. Landlords will face shortfalls in income making it harder for property companies to pay interest to avoid breaching loan covenants. And those property companies have duties to their investors which include pension funds. As for banks, they say they are flat-out dealing with calls from existing borrowers asking for waivers.

So, we decided to intervene. It is a major intervention. Three packages by Deputy Prime Minister – you can compare that with the infusion of blood. This Bill seeks to stanch the flow of blood – a reprieve for a certain period, a matter of months. It seeks to give much-needed liquidity to commercial parties. The immediate impact is a redistribution of monies between the parties to the affected contracts.

Tenants who have to pay rentals, now they can keep the cash. Contractors who have to pay damages, will be relieved from having to pay. Some other categories are also covered. We seek to give breathing space for these businesses, to take stock, see what they can do, assess their position – with cash flow relief meanwhile.

We seek to be targeted and temporary. I would call this a legal circuit breaker: a timeout until this virus dies out and contracts, like life, can return to normal. If we were to insist on the letter of the law, the last precise minutest contractual obligation, we would like Shylock, be insisting on extracting the last pound of flesh, but at the expense of the life and spirit of this country.

Better a circuit breaker, so the spirit of the law, the essence of contracts which is trust, can live and in time to come, thrive again. And I have no doubt, it will do so.

That is the rationale for our intervention. None of us in our lifetime have encountered an economic shock like this. And the Government has to do everything to intervene to help keep some structure of the economy.

Let me now turn to the Bill. What is the time period covered? We do not know how long this situation will last. In the first instance, the Bill will be valid for six months. The Minister will be given power to extend it, up to a year. Thereafter, if we want to extend it, we have to come back to Parliament.

Measures under Part 2 of the Bill, they apply to obligations to be performed on or after 1 February 2020, regardless of when prior to that the contracts were entered into. The reason we have chosen 1 February 2020 is, we believe the effects of COVID-19 began to be felt significantly in Singapore after 1 February 2020. Supply chains connected to events occurring outside Singapore were being disrupted.

At the same time, the measures do not apply to contracts that were entered into on or after 25 March 2020. On 24 March 2020, MOH enhanced the restrictions and promoted safe distancing. So, if parties, with knowledge of those facts, entered into contracts in the last few days, they should not seek help from this Bill.

If a person wants to claim relief, how does he do so? He has got to give notice to the other party. Once a notification has been sent, certain types of actions are prohibited. These include: (a) commencing or continuing a legal action; (b) making an application for winding up, bankruptcy, judicial management order; (c) terminating a lease or licence of immovable property for non-payment of rent – landlords can, however, use the security deposit to offset rental payments due because that does not create additional cash flow obligation on the tenants; (d) enforcement of certain securities over immovable property. It will also be prevented from (e) enforcement of any security over movable property used for the purpose of trade business or profession. You cannot enforce, you cannot repossess goods used for trade business or profession.

Non-compliance is an offence punishable with a fine. Other consequences depending on the nature of the prohibited action that is taken: action may be dismissed, voided, invalidated.

What are the categories of contracts covered? There are five broad categories. The Minister will be empowered to add further categories of contracts. The reason is, as I said, we did this in nine days. We took the contracts that we knew were clearly covered, but we wanted the ability to add in other categories should there be feedback on that. And we did not want to wait for a full assessment, allow perfection to become the opposite of what needs to be done immediately.

The first category covered leases, licences of non-residential property. A tenant who seeks relief must show that he is unable to pay rent during the prescribed period and that the inability to pay is to a material extent caused by a COVID-19 event. If he can show, that then the lease or licence cannot be terminated on the basis that rent has not been paid; and legal proceedings cannot be commenced against tenants on the basis that rent has not been paid.

This is help in real terms because the tenants will get breathing space, to adjust their businesses, survive in the medium term: it is liquidity for them. And these measures, of course, should be seen together with other measures that the Government and the financial industry have announced.

If you take an F&B outlet for example, as I said earlier, if it is an SME, nearly 30% of its business cost goes towards rental. It will have that liquidity now in real terms and if they did not have the cash, at least they do not have to go and look for the money now.

And for those who meet the requirements under the Bill, they can then delay the payment of rent, if they wish, for some months. In addition, of course, you have got the 75% salary support for April and the enhanced Government-supported loans at low interest and the various measures announced by MAS.

These measures do not mean that all tenants do not have to pay rent. Those who have the ability to make rental payments must continue to do so. The Bill seeks to help those who are unable to pay and the measures are only for a period. The landlord’s rights can be exercised after that. For example, if an MNC, or a substantial company applies, it will probably not qualify because it has got to show that it is "unable" to pay, not just that business has suffered.

Let me cite a real life example, to illustrate how this plays out.

Two weeks ago, Germany passed emergency legislation to provide relief to individuals and businesses from the economic impact of COVID-19. The German legislation provides that anyone who is affected by COVID-19 does not have to pay rent between 1 April and 30 June, and they cannot be evicted. After the law came into force, several people said they would not be paying rent, including a string of retailers – Adidas and H&M, for example. Adidas was reported to have made a net profit of nearly $2 billion euros last year. It faced massive criticism. German politicians urged that financially sound companies should not take advantage of the situation and that they must show solidarity in a time of crisis. The officials also clarified that the law was not meant to cover entities that were able to make rental payments.

Our Bill is scoped to deal with this. So, relief is only available where there is an inability to pay rent; and that inability to pay rent is, to a material extent, caused by COVID-19.

This intervention is substantial because the total value of rental in our industrial and commercial sectors is estimated in 2018 – when figures are available – to be at about $21 billion. Of that, if you look at the SMEs' rentals, that is about $14 billion – covers both services and manufacturing.

Some REITs, some landlords, but REITs in particular, have written to my Ministry. They are concerned that this is going to affect their returns and that the Bill is heavily weighted in favour of tenants. REIT Association of Singapore or REITAS has issued a public statement today, not a coincidence. They say the transfer of cash flow is a mismatch. Deferring rental obligations transfers cash flow constraints from tenant to landlord. They say significant strain is placed on the REIT’s ability to service its own financial and operational obligations and that the REITs have minimal financial flexibility to absorb cash flow disruption, because of the requirement to pay out 90% of income to qualify for tax exemption.

The first point is that there is a deferral of rental obligations but the rental obligations do not go away. Rent will continue accrue.

Second, the relief only applies to those who are unable to perform due to COVID. They are not going to be able to pay you anyway. Many landlords in Singapore, many others, have suffered cash flow disruptions even without the Bill; and it is not just REITs which face this. Landlords are able to set off the security deposits they have, so, in a sense, for the first couple of months, at least, the landlords also do not have any cash flow constraints because they set off against the deposits they have. During that period, parties are encouraged to work out a compromise. The Assessors will try and find just and equitable outcomes, including, for example, reviewing the moratorium after three months. So, landlords also have to be realistic about the impact COVID-19 has had on the entire economy and cash flow on all sectors. REITs are not the only ones affected and on the tax issues that are raised, REITAS can approach the Government and discuss precisely what the issues are.

The second point that the REITAS statement makes is: the enforced interruption of revenue has the potential to degrade key metrics, in turn impacting on their financial stability. I would say it is the pandemic and not this Bill, that has caused all these interruptions. The Bill gives parties a better opportunity to work out a compromise quickly and without costly long-drawn litigation or legal proceedings, which will be a drag on everyone.

They also make the point that REITs are seen as a source of stable and predictable outcome and many domestic retail investors have come to reply on the regular, stable and predictable distributions that REITs provide. So the inability of REITs to receive up to 100% of their rental income for up to six months will result in lower cash flows to REITs, who will then be compelled to lower the distributions to unitholders.

Let me make a few points. We are not anti-landlord. Landlords and REITs have an important, highly valuable economic function. They make the market more efficient. Our task is to see how to protect as much of the business eco-system as possible – from the banks, to the landlords, to the tenants, to the consumers. Because the welfare of Singaporeans, their jobs, depends on the economy being protected. We cannot give 100% protection. But we have to move quickly to give as much protection as is sensible.

I have sought to explain how we have attempted to protect as much of the eco-system as possible – for individuals: cash, training grants, vouchers and more; for SMEs and tenants: there is rental protection, credit flow, mortgage protection, MAS measures, JSS. The landlords get most of this too. The Government is paying 75% of your employees' salaries in April and a portion of the salaries for the rest of the nine months when JSS applies, and you will also get the benefit of the credit lines and the MAS' initiatives.

The SMEs and individuals are facing a lot of pain. If they are not helped, the entire business eco-system could crash. Morally as well: some of this pain has to be shared. Landlords have benefited tremendously from growth, the Government’s rational policies, good governance, low taxes in Singapore, and fairness and justice requires that they help share some of this pain, rather than leaving it to the smallest and weakest to bear it all.

If a tenant applies under the Bill, and if the landlord and tenant cannot agree, they go to the Assessors. The Assessors will see the previous year’s tax returns, the accounts; they may ask for additional information and then will determine if a tenant is unable to pay.

Generally, if a tenant is a small business and accounts show that it has been impacted by COVID-19, Assessors will likely accept that the tenant was unable to pay. The Assessors could say: suspend rental payments for three months. Thereafter, if problems continue, come back to us.

The appeals from REITs say that they cannot evict tenants, it will affect our returns, there will be other tenants who can make up the tenancies. Sir, most of the landlords and REITs we have spoken with, accept the need for the Bill. If I may say so, when the whole house, meaning the whole economy, is under threat, we should try not to focus too much on our own individual rooms. We all need to pitch in to save the economy as a whole.

I would suggest that there are broader concerns beyond the rates of return. Everyone has to take a collective approach. Is it really going to be possible for you to get the previous rates of return for the next six months? Is it possible to have business as usual in the next few months? Not possible. And if it is truly the case that the landlords can find other tenants and if the current tenant is taking advantage of the situation, let us know – that will be part of the assessment.

Sir, I would suggest that we do not take the approach of circling the wagons, to focus only on our specific interests. The landlords would benefit quite a lot, from the three packages that the Deputy Prime Minister has announced.

SMEs accounted for 72% of employment in Singapore. Let us remember that.

We will make sure the Assessors are able to take all the facts into account, when deciding what is just and equitable.

The second category of contracts that are covered will be construction-related contracts. The built-environment sector has felt the impact of COVID-19 and continues to feel this impact on several fronts. First, supply disruption – construction materials. It started with building materials and equipment coming into Singapore from China. More recently, disruption of precast and prefabricated, prefinished, volumetric construction materials, other types of materials coming into Singapore from Malaysia. They have all been disrupted.

Second, manpower shortage: I talked about it. I talked about SCAL saying sites are experiencing up to 40% shortage in workforce and drop in progress payments. Progress payments have dropped anywhere between 5% and 20%, and it will probably get worse.

Travel restrictions are likely to continue worldwide; the situation may worsen. Many construction firms will likely face financial difficulties.

The measures in this Bill will help the construction sector in the following ways.

First, if a contractor is not able to perform due to a COVID-19 event between 1 February 2020 and the end of the prescribed period, that period should be disregarded in determining what is the period of delay in performance.

Second, the Bill provides for a defence to any claim for breach of contract. The defence will apply if the inability occurred on or after 1 February 2020, and before the end of the prescribed period, which we will have to determine, depending on how the situation evolves.

This is a substantial intervention.

The total value of construction contracts awarded last year in Singapore amounted to $33 billion. That is the size of the industry as a whole.

The third category is event and tourism-related contracts. For example, contracts to hold wedding banquets, business meetings, conferences. They include catering, provision of other goods or services for such events and certain contracts for accommodation, entertainment, tourism.

If the event was scheduled to be held on or after 1 February 2020 and could not proceed due to a COVID-19 event, any deposits forfeited must be restored as if they had not been forfeited. This is provided the party seeking relief has served a notification for relief on the other party. Deposits that have not yet been forfeited must also not be forfeited. The same applies to tourism-related contracts. Non-compliance will be an offence.

While many hotels and venue providers have been understanding and offered to hold on to deposits, there have been some which have simply forfeited the deposit; insisted on the event being held.

One example is a letter we received from a man who had made a booking with an event space provider. He had arranged for his daughter’s 21st birthday celebration to be held on 4 April. Booking had been done sometime in early March and more than 10 guests had been invited. The man approached the event space provider to seek a refund or postponement until after the COVID-19 related measures.

Mr Speaker: Order. Minister Shanmugam, just take pause on the party. Leader.

Debate resumed.

Mr Speaker: Minister Shanmugam, please proceed with the birthday celebration.

4.00 pm

The Minister for Law (Mr K Shanmugam): 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.

Debate resumed.

Mr Speaker: Senior Minister of State Edwin Tong.

4.15 pm

The Minister of State for Law (Mr Edwin Tong Chun Fai): I will now deal with Parts 4 and 5 of the Bill which introduce two provisions – clause 27, which deals with alternative arrangements for meetings which are usually required to be held in person – the attendance of the shareholders, for example, in person at an AGM; and also clause 28 which provides for the conduct of Court proceedings by remote means.

Sir, legal proceedings and such meetings generally require personal attendance. However, the spread of COVID-19 infections and the Government's control measures to address this, has meant that such meetings and Court proceedings, to be held in person or to be attended by persons physically, are no longer always possible or, even when they are, should be reduced.

On 27 March, MOH’s Safe-Distancing Regulations under the Infectious Diseases Act, came into force. This limited gatherings outside of work and school to 10 persons or fewer. Since then, these control measures have been progressively enhanced, stepped up and made stricter.

This has given rise to some problems transacting usual commercial and other matters. Many companies, including those listed on the Singapore Exchange, have been unable to hold shareholder meetings, including AGMs, to obtain shareholder approval to undertake a proposed course of action by the company.

For example, meetings which otherwise would be held to approve dividend payments, which can, of course, be given to shareholders and to assist in their cash flow, could not be held. Companies could not raise capital, for example, through rights issues and share capital increases, where meetings were otherwise necessary.

Since 27 March, when the Safe Distancing Regulations were stepped up and came into force, certain AGMs were also postponed as a result. For example, DBS Group Holdings, OCBC and Great Eastern, three examples of large corporates where ordinarily more than a thousand shareholders would attend the meetings – and there are other companies – have had to defer their AGMs, pending the passing of this Bill. This, in turn, also meant that they would have had to defer payment of final dividends for the financial year, as these can only be approved at the AGM.

Several real estate investment trusts, such as Ascendas and OUE Commercial, have also had to defer their AGMs. And listed companies, like Capitaland and Starhub, have had to obtain extensions of time, keeping their meetings and, thereafter, their corporate plans, in abeyance.

But it is not just the corporate sector which has been affected. Similar challenges have also been faced by a range of different bodies in different sectors, for example, charities, societies, co-operative societies, trade unions and MCSTs.

For these bodies, not being able to hold their meetings can have various adverse implications. Some trade unions, for example, may be unable to obtain approval for additional expenditures to provide assistance to members, particularly during this COVID-19 situation. MCSTs may not be able to carry out urgent non-routine works on their estates, where subsidiary proprietors’ approvals would have been needed. En bloc sales may not be able to complete by the stipulated timelines, if the requisite meetings are not held. In these situations, if sellers fail to meet their deadlines, they may have to start the process all over, jeopardising existing sales arrangements and, of course, scuttling the plans of buyers and sellers alike.

Societies and charities would be unable to meet deadlines to elect officers for governance purposes, and cooperative societies unable to issue dividends to members. There are many other examples.

So, across a range of sectors and in the financial markets, the inability to hold meetings has led to a significant degree of uncertainty and disruption.

Hence, Part 4 of this Bill seeks to introduce and allow some flexibility for the conduct of meetings to be held in compliance with the necessary safe distancing measures, while at the same time, maintaining propriety in the conduct of these meetings.

Clause 27 applies to all situations where personal attendance at the meeting is provided for in written law or any legal instrument. There need not be an explicit requirement for physical attendance. The relevant law or legal instrument may simply entitle a person to attend a meeting. In this case, clause 27 would apply. The relevant law or legal instrument may provide for both virtual meetings and personal attendance. In such a situation, clause 27 would also apply.

Under clause 27, the Minister for Law may prescribe, by order, any alternative meeting arrangement he considers necessary or desirable for that meeting or class of meetings to take place. Compliance with the prescribed alternative arrangements will override anything to the contrary in law or the legal instrument. The prescribed alternative arrangements are designed to be pragmatic and also practicable, given the prevailing conditions. Safety of the participants, in particular, will be the priority. But there will be safeguards to facilitate informed and effective participation and, at the same time, mindful of the technological constraints and security considerations to ensure that the meeting is held regularly.

The range of options that can be considered are set out in clause 27(2), which allows in appropriate cases, for meeting proceedings to take place electronically or by video-conference, or voting by electronic means or for an appropriate period of notice to be provided or enhanced, to name a few.

To illustrate, alternative arrangements for a company AGM may look something like this: the meeting can be completely virtual and there will be no need to meet physically. A smaller quorum could also be set. Documents, such as notices of meetings or proxy forms, may be sent by electronic means, instead of hard copy. People do not need to be in the office to do printing, copying, sealing of envelopes and so on. Notices of meetings, including electronic meetings, will have to comply with the prescribed minimum notice period, as a safeguard. Since voting in person by everyone at the meeting is not possible, proxy voting can also be used. As a safeguard, a specific office-holder, such as the chairman, may be designated as the sole proxy.

There will also be safeguards to ensure that the meeting is conducted properly. Hence, the meeting must have “live” video and audio feed. Members must be given the opportunity to submit questions, such as through email, in advance of the meeting and these questions must be addressed by the chairman or the relevant officer of the meeting before or during the meeting.

There may be some variations in the way in which these arrangements might work from one type of meeting to another; from one society to another society. There is not a one-size-fits-all approach, which is why clause 27(2) prescribes a suite of options available to the Minister to prescribe, as may be appropriate, from one type of meeting to another.

I should highlight to Members that clause 27, like some other parts of this Bill, applies retrospectively, from 27 March, the date of MOH’s Safe-Distancing Regulations. Hence, under clause 27(5), the order under clause 27(1) may apply retrospectively so that any meetings held in the intervening period would be covered.

We have made this known as far as possible to the market once this Bill was being prepared so that people in the market could rely on the provisions of this Bill, and know about it as soon as possible.

In the period leading up to the publication of this Bill, MinLaw and MOH issued a joint press release on 31 March announcing these proposed legislative provisions so that the market and its users were clear, and also making clear that the intention was for this Bill to apply retrospectively from 27 March. On the same day, SGX, ACRA and MAS issued their joint guidance for listed companies. The guidance sets out in detail how issuers could hold meetings in compliance with the safe distancing measures.

Applying clause 27 retrospectively ensures that rearrangements made to meetings between 27 March and when the alternative arrangements are prescribed, will be upheld. This includes meetings that were deferred in response to safe distancing measures, and also meetings which were reconvened after being originally deferred.

Sir, the application of clause 27 in this period will reduce disruption, increase legal certainty and allow for, as much as possible, commercial transactions and activities to carry on, even in this period.

I will now deal with clause 28. The conduct of Court proceedings in physical courtrooms will also need to be reduced during this period where control measures are in place. Hence, more proceedings will be held remotely with the aid of technology.

The Judiciary and the Syariah Court have already moved decisively prior to this in response to the measures implemented by the Government to minimise the spread of COVID-19. During the period specified by the Judiciary and the Syariah Court, every matter fixed for hearing in the Supreme Court, State Courts and Family Justice Courts, as well as in the Syariah Court, either have already been, or will shortly be adjourned, unless assessed to be essential and urgent. Hearings during this period will, as far as possible, be conducted through electronic means.

Clause 28 of the Bill will complement and facilitate these measures by allowing for a wider use of remote communication in Court proceedings in the following way.

Subject to conditions which I will outline, accused persons in Singapore and specified categories of witnesses from abroad can give evidence remotely, either by video or television link, in any Court proceedings. This applies also to Syariah Court proceedings.

Clause 28 will allow any Court or Syariah Court proceedings to be conducted remotely, if certain conditions are met. This means that Judges may hear the cases remotely, outside of a courtroom.

There are some conditions, as I have mentioned earlier, to ensure the propriety of the proceedings. Therefore, a witness who makes an appearance or gives evidence must do so only from a place specified by the Court or the Syariah Court.

Second, if the witness is a witness of fact, then the parties to the proceedings must come together and agree that this witness can testify by remote communication. Existing safeguards adapted from the Evidence Act and the Criminal Procedure Code will continue to apply. So, for example, the Court or the Syariah Court must not make an order to conduct proceedings remotely, if having regard to the overall justice of the case, the proceedings cannot be conducted fairly if proceedings were held remotely. Fairness of the proceedings remains the overriding consideration.

The existing rules which prohibit unauthorised audio or visual recordings in Court will also apply under Part 5 of the Bill. So, for instance, a litigant who is engaged in remote Court proceedings cannot be recording the proceedings without the Court’s permission.

These measures, Sir, are designed to be temporary in nature and are intended to ensure the continued operation of the Courts during the COVID-19 situation as much as possible. Hence, two temporal limits have been put in place.

First, the measures will only apply during the specified period. This is the period that the control measures to prevent the spread of COVID-19 are in force, or any further period necessary or expedient to conduct any proceeding in a safe and efficient manner.

Second, clause 28 also contains sunset clauses. These allow the Minister for Law, in consultation with the Chief Justice or the Minister in charge of Muslim Affairs, to declare that clause 28 would cease to apply to any Court or Syariah Court proceedings, respectively.

Sir, to conclude on these two Parts of the Bill, clauses 27 and 28 of the Bill are designed to respond to changes arising from our country’s fight against COVID-19. These provisions will ensure that commerce and the administration of justice do not grind to a complete halt, even as we observe the circuit breaker measures which the Government has implemented.

Mr Speaker: Minister Lawrence Wong.

4.28 pm

The Second Minister for Finance (Mr Lawrence Wong): Mr Speaker, Sir, let me elaborate on Part 6 of the Bill, which introduces an obligation on property owners to pass on the prescribed property tax rebate received to their tenants in the form of monetary payment or reduction in rentals in a timely manner.

To help businesses affected by the COVID-19 pandemic, the Government introduced the property tax rebate for non-residential properties, as announced in the Budget and the Supplementary Budget. Owners of such properties are granted a property tax rebate of 30%, 60% or 100%, depending on the nature of the property, for 2020. The policy intent of the property tax rebate is to help the business operator affected by the COVID-19 pandemic. Hence, the Government had strongly urged property owners to pass down the rebate to their tenants.

Let me, first, before elaborating on the obligation, highlight or explain how our system of property tax works. Property owners pay property tax for each property tax account. In many cases, one property would be covered under one property tax account. But there are also many other cases with one property but multiple property tax accounts. For example, a retail mall would have multiple property tax accounts because a shop within the mall, like a retail store or restaurant, would be accounted for under a single property tax account. In total, the 2020 property tax rebate will cover about 135,000 property tax accounts, including 33,000 property tax accounts for about 360 retail malls.

The Government fully appreciates the property owners who have or are in the process of passing on the rebate to their tenants, either by making cash payments or by reducing rentals. In some instances, property owners have gone further to reduce rentals by an amount that is greater than the quantum of the rebate. In so doing, they have taken a step further to help their tenants and share the burden during this time of uncertainty.

However, the Government has also received feedback, particularly from tenants, that there are property owners who have not yet passed on the rebate to them. And just to set things in perspective, a 100% property tax rebate will work out to slightly more than one month of rent for most properties. So, the provisions in this Bill ensure that property owners who have not passed on the rebate fully will have to do so. Specifically, the Bill requires a property owner to pass on the full amount of property tax rebate attributable to a rented property to his tenant, in a timely manner. We will require the property owner to pass on the rebate by making a cash payment to his tenant or by reducing or offsetting future rental payments.

Property owners are also prohibited from imposing conditions when passing on the rebate. The property owner must keep records that he has so passed on the benefit and when he has done so. Failure to properly pass on the rebate or to keep a proper record is also an offence. For instance, if a property tax account is for a property wholly rented out to a tenant for the whole of 2020, the property owner should pass on the full sum of the rebate he received as the rebate is entirely attributed to a rented space.

The Bill also provides the property owner or the property owner's tenant with an avenue of redress should there be any dispute as to whether the owner has properly passed on the benefit or whether the provisions apply to the property owner. The owner or his tenant may apply to a Valuation Review Panel, which will adjudicate disputes between the owner and his tenant. Any dispute relating to the transfer of the property tax rebate granted this year must be brought to the Panel by 31 December 2021. The Panel will then determine if the property owner has indeed passed on the rebate fully to his tenants in the required manner by the required timelines. The Panel may make further directions for compliance by the owner. A determination and any further directions of a Valuation Review Panel are appealable to the High Court if they involve questions of law, or mixed law and fact.

Further details of the pass-through of the property tax rebate to tenants will be provided under the subsidiary legislation and on the website of the Inland Revenue Authority of Singapore.

Mr Speaker, Sir, the Government urges all property owners to support their tenants through this difficult time. And with this Bill, we will require all property owners to do their part. Beyond the legal requirements, we call on all stakeholders, be it landlords or tenants, to really come together in the spirit of SG United so that we can work together and overcome the impact of COVID-19 together.

Mr Speaker: Minister Gan

4.34 pm

The Minister for Health (Mr Gan Kim Yong): Mr Speaker, the Prime Minister announced in his address to the nation last Friday a set of strict measures to slow the transmission of COVID-19 in Singapore. On the same day, the Multi-Ministry Taskforce shared the details of these measures, which include moving towards full home-based learning for our schools, closing most physical workplace and other premises, prohibiting social gatherings and urging Singaporeans to stay home and not to go out unnecessarily.

This enhanced set of safe distancing measures serves as a critical circuit breaker to curb the trend of increasing local transmission of COVID-19. The trend is particularly concerning in the past week. The daily number of new cases crossed the 100 mark two days ago. There was also an increasing number of unlinked cases in the past week, which suggests that there are quite a number of undetected cases within our community which have led to these unlinked cases. We are also starting to see the emergence of new clusters daily.

The Government has taken a series of steps progressively over the last three months to curb the spread of COVID-19 in Singapore, based on our risk assessment of the evolving situation both locally and globally, as well as our anticipation of the likely trends and developments ahead of us. It is now timely to introduce heightened measures, given the worrying trends, to curb a further rise in cases and pre-empt widespread community transmission. In other words, we need to apply brakes, hard brakes, to slow the transmission. This is what we mean by a circuit breaker. Enhanced safe distancing is necessary to significantly reduce movements and interactions in both public and private places. This circuit breaker is not a holiday. It is an important opportunity for us to work together to slow the infection significantly. The key message is simply this: “Stay home. Go out only for essential activities. Avoid close contact with people. If you cannot avoid close contact, wear a mask to protect others and to protect yourself.” Everyone must play our part for the circuit breaker to be effective.

To effect our plans, we have included provisions in the COVID-19 (Temporary Measures) Bill to provide the legal basis to enforce the enhanced safe distancing measures. These are temporary measures specific to the COVID-19 situation we are facing currently.

Let me elaborate on the key provisions.

The Bill provides the Minister for Health the power to close premises, such as workplaces, schools, recreational facilities and places of worship, to minimise interactions and reduce the risk of COVID-19 transmission; while allowing premises that provide essential services or are in selected economic sectors which are critical to our local and global supply chains to remain open so that services vital to Singapore’s security and to Singaporeans’ daily living can continue to be provided.

Examples of essential services include healthcare, transport, cleaning services and food-related services; and supply chains, such as F&B establishments, supermarkets and food manufacturing. The list of essential services is published online (https://covid.gobusiness.gov.sg/essentialservices). The Public Service will also be fully operational and Government services will be available, but with the majority of the public service workforce telecommuting. Services that are not essential and will therefore have to close their physical premises include fashion retail outlets, beauty and wellness services, and public and private recreational facilities, such as gyms and swimming pools, including those in private condominiums.

For premises that remain open, the Bill also provides powers to set requirements for the premises and the manner of carrying out the business while it is in operation. For example, F&B providers like hawker centres and restaurants can remain open but only for takeaway or delivery. Dining-in is not allowed so as to reduce people interactions. Businesses and owners of premises that remain open will also need to implement strict safe distancing measures, such as minimising staff on-site, introducing staggered work hours or avoiding social interactions during meal times, as well as ensuring safe distancing for queues, if any.

Second, the Bill allows the Minister to put in place measures to restrict the movement of people in specified places, as well as to limit the usage of specific premises and facilities.

The Bill allows the Minister to restrict individuals’ movements and interactions at their place of residence or any specified place, as well as their use of common areas, such as void decks and shared facilities in HDB estates and private condominiums. Members of the public are urged to stay at home. There are good and necessary reasons for going out, and these will be allowed by the control order, but we would strongly urge everyone not to go out, except to purchase daily necessities, essential services, or for urgent medical needs. And when they are out, they must adhere to the safe distancing measures. While the majority of Singaporeans are responsible and will try to comply with the safe distancing measures, there will, inevitably, be a few individuals who do not treat the situation seriously and blatantly disregard the rules. For example, they may refuse to adhere to safe distancing measures put in place by F&B venues, such as coffee shops or supermarkets, or they may loiter and inter-mingle in groups in public areas instead of staying at home. In doing so, they place themselves and others around them at risk of infection. We will not hesitate to take action against such persons and send a strong signal to prevent such behaviour from negating our collective efforts during this crucial circuit breaker to slow down the infection.

Third, the Bill also allows the Minister to prohibit events and gatherings or impose conditions on how they are conducted and on the participation in such activities. This enables us to better regulate events and gatherings, including those that take place on private properties. For example, we had earlier required certain events and mass gatherings to be deferred or cancelled. We will now also disallow social gatherings of any size in both private and public places. This would include having private parties or gatherings with families or friends not living together, at home or in public spaces, such as in parks and HDB void decks.

Fourth, the Bill provides the option to bring the Requisition of Resources Act (RORA) into effect, for the purposes of containing COVID-19 and caring for the patients and those at risk. This allows for the requisition of land, property or services needed to ramp up our healthcare capacity and public health capabilities. For instance, if the number of COVID-19 cases continue to rise in Singapore, it may become necessary to requisition buildings suitable for conversion into accommodation and care facilities in order to isolate individuals who are suspected or confirmed to be infected, to reduce the risk of further spread, while caring for them.

I am very grateful that, today, many hotel and building operators have voluntarily stepped forward in this difficult period to work with the Government to support the national COVID-19 efforts. However, in a crisis like this, time is often of the essence and we cannot rely solely on commercial negotiation or the goodwill of the resource owners. We will need to move fast. Should the RORA be invoked, the Government will exercise these provisions judiciously and work closely with the affected parties.

The Bill empowers the Minister or any public officer authorised by the Minister to appoint enforcement officers to take action against individuals, business owners or entities which flout the orders and requirements. The enforcement officers will include police officers, public officers and health officers appointed under the Infectious Diseases Act.

For our enhanced safe distancing measures to work, we need members of the public to take the measures seriously. Therefore, failure to adhere to the measures without a reasonable justification will constitute an offence. We need to send a strong signal to those who are egregious in flouting the measures, as they are putting not only themselves but also others at risk. Let me reassure Members that the enforcement officers will look at the facts of each case carefully, including whether there are reasonable explanations for any non-compliance, before taking action.

The penalties are aligned with those under the Infectious Diseases Act. For first-time offenders, the penalty is a fine of up to $10,000, or imprisonment of up to six months, or both. For second or subsequent offences, the penalty is a fine of up to $20,000, or imprisonment of up to 12 months, or both.

Apart from powers, there are also provisions in the Bill for safeguards.

First, let me emphasise that the Minister may make such orders only when the Minister is satisfied that the incidence and transmission of COVID-19 constitute a serious threat to public health and that the provisions of a control order are necessary or expedient to prevent or contain the spread.

Second, a control order and any amendment must be presented to Parliament as soon as possible after its publication in the Gazette and Parliament may pass a resolution annulling the control order or any part of it or make any amendment of it.

Third, the Minister must publish the control order such that it is brought to the notice of those affected by it, in addition to publishing it in the Gazette.

Mr Speaker, the provisions in the COVID-19 (Temporary Measures) Bill to enforce the heightened safe distancing measures take reference from the existing Infectious Diseases Act and Regulations and further calibrate the powers to suit our specific needs during this present COVID-19 situation. The provisions adapt existing powers on safe distancing. In addition, they allow us to close certain types of workplace premises while allowing those that are essential to everyday living and supply chains to operate.

This carefully balanced approach allows us to minimise social interactions to curb further transmission. To consolidate and simplify the rules for all, we will be revoking the current workplace regulations and general preventative regulations once the relevant provisions have been folded into the control order made under the COVID-19 (Temporary Measures) Act.

The circuit breaker will be imposed until 4 May. We will review the situation then to decide whether there is a need to extend the circuit breaker period and, if so, whether some of the measures need to be adjusted.

To sum up, Part 7 of the COVID-19 (Temporary Measures) Bill is needed to ensure tight adherence to the enhanced safe distancing measures in reducing the transmission of COVID-19 for the overall well-being of the nation. Everyone must play our part, act responsibly and observe the measures set out to protect our population.

I ask for the support of all the Members of the House for this Bill so that, together, we can win the fight against COVID-19.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 5.10 pm. Order, order.

Sitting accordingly suspended

at 4.47 pm until 5.10 pm.

Sitting resumed at 5.10 pm.

[Deputy Speaker (Mr Charles Chong) in the Chair]

COVID-19 (Temporary Measures) Bill

Debate resumed.

5.11 pm

Mr Christopher de Souza (Holland-Bukit Timah): Sir, I stand in support of this Bill. The present COVID-19 crisis is one of epic proportions – the challenge of a generation, perhaps, several generations. The steps we take now will define how future generations of Singaporeans will view us.

For some fellow Singaporeans, this crisis could quite literally translate into a matter of life or death. So far, we have responded robustly, firmly and decisively. To borrow an analogy recently made by the Minister for Law, budgetary measures are the financial equivalent of an urgent blood transfusion. But he also said that just as there is a transfusion, we also need to staunch the flow of blood. Sir, in this regard, the proposed Bill is the analogous bandage that staunches the blood flow. So, at the outset, let me iterate my full support for the Bill while also declaring my interest as a practising lawyer.

This Bill is exceptional, yet timely and responsive. It is exceptional because, as I understand it, the Bill was put together in a matter of days. In addition, the Bill acts retrospectively, something which lawyers normally discourage, given that it departs from one of the main principles underlining the rule of law. Nevertheless, in my view, this is well justified under these extenuating circumstances.

It is also timely and responsive for several key reasons.

First, the Bill offers much needed reprieve – reprieve in the form of certainty that there is a window to breathe such that there is a hope that businesses can be resuscitated when the situation improves.

The core provisions of this part of the Bill can essentially be found in clauses 5(2), 5(3) and 6(2). These provisions impose a moratorium over five kinds of actions: Court and insolvency proceedings, enforcement of judgments and arbitration decisions, the enforcement of certain types of security, the calling on a performance bond pursuant to a construction contract, and the termination of leases of non-residential premises. Collectively, they provide a sturdy mast in choppy waters.

For many of our businesses, the global economic repercussions of COVID-19 and our local circuit breaker measures mean revenues have dwindled to nearly nothing. While these economic circumstances are not due to their own actions, the impact means that businesses essentially have multiple swords hanging over their heads. If these liabilities are allowed to vest and fall due, businesses would be starved of their cash flow and would very possibly be forced out of business. This is not only bad for businesses. It is also bad for Singapore. It means that when the global situation gets better, we would have few businesses left standing to ride the wave of recovery. We need businesses to stand, and this Bill helps us do that.

For event and tourism-related contracts, additional reprieve is provided in clause 7. Many of these contracts involve the placement of deposits, which do not involve small sums of money. Clause 7(2) ensures that these deposits cannot be automatically forfeited, thus allowing contracting parties to look for an alternative arrangement without the fear of financial loss. It may seem like a small measure but for man individuals and beleaguered small and medium-sized businesses that have paid deposits, I believe this will go a long way in alleviating a significant portion of their cash flow concerns.

Second, this Bill allows for a situation of a reduced threat of litigation, insolvency, bankruptcy, landlord-tenant disputes, hire purchase disputes from hanging over struggling businesses over the course of the next few months. This can be seen in part three of the Bill, which modifies various Acts to give temporary relief to financially distressed individuals and businesses.

For instance, clause 20 raises the monetary threshold for bankruptcy applications from $15,000 to $60,000 and increases the time period to satisfy or set aside a statutory demand from the current 21 days to six months. For businesses, clause 21 increases the monetary threshold for insolvency from $10,000 to $100,000 and similarly extends the time period to satisfy or set aside statutory demands to six months. These significant changes will allow management teams to channel their mental energy towards keeping their businesses afloat and viable post-crisis, rather than or instead of them having to think about how to fend off litigation and insolvency actions. Essentially, this Bill allows management to use their mental energy to innovate, ride the storm and survive post-crisis, rather than to having to stave off and fend off insolvency proceedings or bankruptcy proceedings. I think it is a much needed reprieve.

However, Sir, I seek a number of clarifications on the status of legal action and cases already commenced before the Bill comes into force. Here, I am in particular talking about hire purchase vehicles and landlord-tenant disputes – cases and actions arising around those areas.

Third, the Bill sets out amendments to facilitate the conduct of court proceedings using remote communications technology. Clause 28(1) empowers the court to make orders to require an accused person or witness to give evidence in any court proceedings by a live video or live television link. This is to be welcomed.

Nevertheless, Mr Deputy Speaker, I wish to clarify a few points about the Bill.

First, the Bill provides a mechanism to manage disputes arising from the application of the Bill. Division four of part two of the Bill contains provisions relating to the appointment of Assessors, the means for applying for an assessment, the powers of an Assessor, as well as provisions relating to costs. While the assessment process is undoubtedly intended to be a fast and efficient one, given the existing universe of contracts and the potential number and complexity of disputes, I would like to ask if the Minister intends to put in place measures to ensure that the panel of Assessors are not overwhelmed and are yet still able to arrive at just decisions in a timely manner. It is no good for anybody if these Assessors are stretched so thin that they are under immense time pressure to assess their cases.

I have a further query on clause 13. Does the Assessors' power to achieve a just and equitable outcome include the power to determine that partial payments be made or that a tenant's security deposit may be used to offset rental arrears. This flexibility may allow for a more just and equitable finding or assessment. For instance, in situations where private landlords themselves do not have deep pockets and need the rent to pay toward a mortgage payment. By this, I mean private landlords who are landlords of commercial premises and they are unable to service their mortgage. Will some flexibility also be accorded to them in the assessment process.

Another clarification. Would the Minister consider putting in place digital measures to make the process as simple and straightforward as possible, such as through the use of an online portal to allow parties to request for assessments, upload documents and even receive determinations for appropriate disputes?

Third, a key point about the Bill is that it merely suspends obligations but does not negate their need to be fulfilled. In short, the Bill is like a dam, which holds back the tide of obligations temporarily. However, once the Bill ceases to have effect and this dam is removed, the combined obligations could be quite harsh. I wish to ask if the Minister is looking into providing guidance, such as asking contracting parties to use this period to negotiate with those they have contracted with, to be able to pay off their liabilities in instalments. Mediation, for example, is one such avenue.

Notwithstanding my questions and suggestions, I stand in support of this Bill. Fundamentally, it is about helping enterprises during this difficult period by addressing their cash flow concerns and freeing them up to think about how to survive and innovate through this crisis. It is a comprehensive and significant Bill and I wish to applaud the Ministry of Law, AGC, relevant public agencies and those consulted during its drafting for investing such an immense amount of effort in such a short amount of time. It really does show the efficiency of our legal partners and the legal system at play in these extenuating circumstances.

Sir, this Bill is a continuation of our efforts to respond robustly, firmly and decisively. I am confident that by passing this Bill, this House would be taking a significant step in ensuring that businesses in Singapore have a much better shot of making it through the crisis. And for that reason, I support the Bill.

Mr Deputy Speaker: Ms Jessica Tan.

5.24 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Deputy Speaker, thank you for allowing me to speak on this Bill. A few months ago, no one could have imagined the disruptions on personal lives and businesses that we are witnessing due to the COVID-19 pandemic. From personal celebrations or significant events to commercial contracts and commitments, the inability to proceed with plans has had both economic, social and personal consequences. Weddings and festivities have to be postponed indefinitely, tours, vacations and major business events deferred. Businesses have not been able to perform or deliver on their commitments due to factors beyond their control with measures taken by governments around the world, including Singapore, to stem the spread of COVID-19.

As the Minister has said in his speech, the measures, though temporary, are substantial and significant. The Bill seeks to provide temporary relief to individuals and businesses who are unable to fulfill their contractual obligations because of the impact of COVID-19 and related public health measures, which no one could have foreseen or imagined.

My speech today will touch on the temporary measures in the Bill to provide relief from actions for inability to perform scheduled contracts, as outlined in the Schedule of the Bill, caused by COVID-19 on or after 1 February 2020 for contracts entered into before 25 March 2020.

The Bill seeks to provide protection for bookings from forfeiture of deposits. This is fair for businesses as they have collected the deposits and the bookings will still be honoured and event held, albeit when it is feasible to do so. It is already distressing and disappointing for couples to have to postpone their wedding celebrations or individuals having to reschedule significant events for circumstances that are beyond their control. The cost for such events is not small and deposits paid are also not trivial. The same applies for tours or travel that have been paid for. With border controls and traffic restrictions imposed to prevent the spread of COVID-19, it is therefore fair that there should be protection from forfeiture of deposits or payments made in such circumstances while maintaining the sanctity of the contract.

On the delay of rental payments, the Bill seeks to protect individual or industrial tenants from having to pay damages or forfeit deposits, or face lengthy litigation or possible insolvency for inability to pay rent due to the COVID-19 situation, which they have no control over.

I understand and agree that tenants may need relief to minimise impact on their business cash flow due to the severe fall in demand on their business due to COVID-19. This will allow businesses to continue to pay expenses to allow them to operate and most importantly, to keep jobs and to pay their workers. However, on the flipside, the landlord too will be impacted by the delay in payment of rent. Could the Minister share if there will be relief provided for landlords who, due to the inability to collect rent from tenants in such circumstances, are themselves impacted materially and therefore unable to fulfill their other contractual obligations due to the dependency on rental payments. Will there be temporary relief for them as well?

For the tenants who have sought such temporary relief, rent will continue to accrue and remains payable after the six months' temporary relief period. The rental arrears, even if no interest is charged, will not be a small sum. And here, I do have some concerns, because what it means is that the tenants will end up accumulating outstanding rental debt, which still needs to be paid after the relief period. As the Minister had mentioned in his speech, rent is not an insignificant proportion of the cost that businesses are paying. In fact, it is about 30%. So, there will still be a large sum that tenants will have to pay after this period.

Even if the businesses were viable before the impact of COVID, as the COVID situation improves, business will pick up, but it will take some time to rebuild and it would not be easy for the individual or industrial tenants to be able to settle the outstanding rental immediately.

Would it not be better for the Assessor, while still allowing for temporary relief, to determine whether to allow tenants and landlords to renegotiate the terms of the contract that would be more viable and equitable for both parties. This will not only provide temporary relief for tenants but also minimise a situation where the debt accumulated after the relief period is too large to be repaid. If the debt is too large, the landlord may then also be left with the short end of the deal even after having not received rent during the relief period.

I am glad to hear that Minister had indicated that the Assessor will review the moratorium after three months of the relief. So that I hope will also allow them to calibrate the impact of the debt and may be make an assessment at that point in time.

In the same way that the Bill sets out to give temporary relief to the tenants, the Bill also seeks temporary relief and protection for contractors from non-performance of contractual obligation caused by COVID-19.

The contractor will not be liable for liquidated damages, delays and non-supply of goods arising from the COVID-19 event. A contractor’s delay of works or a non-performance for supply of goods, even if it is due to the unexpected consequences of a COVID-19 event will adversely impact individuals or businesses that the works or supply was committed for. Could Minister also share on how individuals and businesses impacted in such circumstances or such situations be supported?

A case in point. We are seeing appeals for renovations works impacted with the latest announcement of the circuit breaker measures that come into effect today. Sellers of HDB flats, for example, have to hand over flats that they currently live in by an agreed date to the new owner for the completion of the sale. But renovation works have and should stop from now, from today to 4 May. This may result in renovations works for the flat that the seller is moving to would not be able to be completed in time and this may leave the seller with no plans to move to when they are required to hand over the current flat. If they do ask for temporary relief of their contractual obligations to the buyer of the flat, this could create a chain effect.

If my interpretation of the Bill is correct, a practical approach for all parties would be to apply for the temporary relief during the circuit breaker period and this would then allow everyone to take the pause without having material impact on all parties involved. I am not sure whether that is the right interpretation but, basically, it would then allow everyone to not have to be impacted if there are delays.

The last point that I like to touch on is the temporary measures concerning the remission of property tax. The Supplementary Budget grants enhanced rebate for the property tax payable for the period of 1 January 2020 to 31 December 2020. With the unexpected impact of the COVID-19 pandemic on the businesses, I am glad that the Bill seeks to make it a legal obligation to ensure that landlords pass on the benefits of the enhanced property tax rebates to tenants, as these rebates were meant for the tenants.

Clauses 30 and 31 of the Bill provide the avenue for the tenants to take action against the landlords for failing to do so and how and when it can be enforced.

Mr Deputy Speaker, COVID-19 is unprecedented and no individual, business, society or even country is spared its effect. It is therefore necessary for these significant measures proposed in the Bill to provide temporary relief for individuals and businesses affected by COVID-19 who are unable to perform their contractual obligations while still upholding the right to exercise contractual obligations. The essence of this Bill that Minister has stressed is that everyone needs to come together to take our collective approach and I agree with him on this, the spirit of this approach because given what we are seeing in the impact of COVID-19 on everyone, unless we take a collective approach, it is going to be quite difficult for us to move forward effectively. With that, Mr Deputy Speaker, I support the Bill.

5.34 pm

Mr Lim Biow Chuan (Mountbatten): Sir, when MinLaw introduced this Bill on 1 April 2020, it was explained that the Bill seeks to offer temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of COVID-19.

MinLaw further explained that: “The COVID-19 pandemic, and associated public health measures imposed by governments around the world, has had unprecedented and unforeseeable social and economic impact. There are supply chain disruptions and manpower shortages, among other consequences. In many cases, this has undermined the ability of individuals and businesses to fulfil contractual obligations. It would thus be unfair to hold them strictly liable for their failure to do so.” Minister Shanmugam had also given a more elaborate explanation for the basis of this Bill.

Sir, I agree with the rationale provided for the Bill. It provides some form of temporary relief to people or businesses who are adversely affected by COVID-19. Hence, I support the Bill.

However, there are a few areas which I hope that the Minister can provide some clarification and perhaps the thinking behind the Bill.

First, relief against termination of lease for non-residential property. Clause 5 of the proposed Bill provides that a landlord cannot exercise his right of re-entry or forfeiture under a scheduled contract, being a lease or licence of a non-residential immovable property, and the landlord cannot the exercise any other right that has a similar outcome. Sir, there have been some concerns raised by landlords who are either individuals, small companies or SMEs. They feel that this suspension of their rights under the tenancy agreement would affect their cash flow negatively. The landlords worry that they would have to pay hefty interest or late charges on their loans with their financiers when they cannot collect the rent from the tenant. They also worry that the tenant may after six months, become insolvent, then they, the landlord be left without legal recourse except against the security deposit paid by the tenant.

In the response from MAS to the Bill, MAS stated that the contractual rights of banks are not affected, other than the right to commence legal action for a default on a loan covered under the proposed Bill. Banks’ contractual right to charge fees and interest for non-payment or late payment of loan obligations due is unaffected, meaning to say banks can continue to charge fees and interest for late payment or non-payment of the loan obligations.

Thus, it seems that if the tenant does not pay the rental arrears in full after the six months, the landlords are at greater risk because the Bill exposes them to an eventual law suit by the bank. The bank can go after the landlord, go after the security and they can repossess the property but the landlord cannot claim against the tenant if the tenant becomes insolvent.

The other concern which I have is how does the law ensure that tenants understand that this Bill merely provides the tenant temporary relief from certain legal action? At the end of six months, the tenant would still have to pay the arrears of rental plus applicable interest under the tenancy agreement. But if the tenant is struggling to pay the entire rental for a few months, how realistic is it to expect that the tenant can suddenly at the end of six months magically cough up the entire six months arrears of rental. Will this Bill give struggling tenants a false sense that they can escape their legal obligations?

May I also ask the Minister also explain why are residential properties excluded from this Bill. For example, I have residents who say that they are unable to shift out from their tenanted residential homes because their contractors cannot complete the renovations of the home due to the suspension of activities or the circuit breaker order imposed by the Government. Can a tenant of a residential home in this case seek relief under this Bill?

Next, Sir, is about event contract. Clause 7 of the Bill provides that if an event, for example a wedding or a tourism-related contract, is unable to proceed due to a COVID-19 related event, then the venue provider cannot forfeit the person’s deposit unless the provider obtains a determination from an Assessor that it would be just and equitable to forfeit the whole deposit or a part thereof.

However, the suspension of the rights against forfeiture is for a period of only six months. According to the press, some couples have stated that they are unable to postpone their wedding to another date within the next six months. There is no certainty whether the COVID-19 situation can be resolved by then and whether their wedding can then proceed. The organisation of a wedding or for that matter, a convention, a conference, a concert or a sports event takes many months of planning. This current situation leaves too much uncertainty for all parties. There are guest lists to plan and logistics arrangements to be made. Would it not be better to allow the contracting party to cancel the contract and to just pay for whatever reasonable expenses incurred to date by the venue provider?

May I ask the Minister too – what about contracts for tours or boat cruises booked with travel agencies and air tickets booked with airlines? Would there be a similar prohibition against forfeiture of deposits paid. Can the consumer who booked the tour or the air ticket be allowed to claim relief from forfeiture?

Next is the Assessors. The Bill provides for the appointment of Assessors by the Minister. Under clause 13 of the Bill, the Assessor’s determination is binding on all the parties to the application. There is no appeal from an Assessor’s determination.

These are very wide and discretionary powers given to the Assessors. Lawyers are specifically excluded from the hearing by the Assessors. May I know what if there is clear prejudice by an Assessor. How does MinLaw ensure that the appointed Assessor will always be impartial and make a determination or adjudicates in a fair and equitable manner?

Finally, Sir, remission of property tax. I wish to express my support for clause 29 of the Bill. This clause 29 makes it mandatory for a landlord to pass on the benefit of the property tax remission to the tenant. I think this is far better than moral suasion which the Government has been asking the landlords to act upon. Many tenants that I speak to were very unhappy that they have not seen any benefit being passed on to them. Many of them share that their landlords have been stalling and giving excuses for not passing on the tax remission.

To all the landlords who had already planned to pass on the tax remission to the tenants, my heartfelt thanks for doing your part in helping your tenants survive this difficult period. To the other landlords who are still thinking about it, this Bill makes that decision non-negotiable and this is good for the landlord. The tenant survives, continues to pay the rental to the landlord and the landlord continues to get his steady stream of rental income. So, my thanks to the Minister for making this happen. Sir, I support the Bill.

5.41 pm

Mr Zainal Sapari (Pasir Ris-Punggol): Mr Deputy Speaker, the COVID-19 pandemic has caused major disruption to businesses and workers’ livelihoods in an unprecedented way and with much uncertainty as to when this crisis would end.

The Malaysian Government imposed a Movement Control Order from 18 to 31 March, with a further extension to 14 April, as a measure to contain the spread of COVID-19 has affected many of our friends from across the Causeway who are working in Singapore.

In addition, the Singapore Government has introduced stricter measures including safe distancing; restrictions on inbound visitors and putting in place a circuit breaker to pre-empt escalating coronavirus infections.

All these calibrated and necessary measures have a direct impact not only on industries that rely on tourists such as hospitality, leisure, food and retail services, but also their ancillary industries such as landscape, cleaning and security that support such affected industries. Now, we are beginning to see the effect beginning to creep to many other sectors as well. Many of these industries also employ Malaysian workers to supplement their local workforce.

That said, some companies in such ancillary industries like cleaning and environmental services companies, landscape firms and security agencies are caught off-guard by the sudden announcement and had little time to react. Hence, it is understandable that many of them may not be able to meet their contractual obligations during this period if their Malaysian workers do not opt to stay in the accommodations provided by the companies or choose to be with their own families across the causeway.

With this Bill, I hope that firstly, service buyers will be deterred from acting in a high-handed manner and will not be able to impose liquidated damages for any shortfall in service standards due to manpower shortage.

The Security Industry Council, made up of the union for security employees and the two security associations, issued an appeal to the service buyers of security services urging them "to be reasonable and flexible as regards to the security agencies' contractual obligations, including the imposition of liquidated damages, during this exceptional period".

Similar appeals were made by the Tripartite Committees for the environmental services and landscape industries. The message is clear. Be reasonable. Avoid unnecessary punitive actions because the situation was brought about by circumstances beyond their control.

With the support of our Government, many of these companies are doing their best to help their affected workers, while continuing to provide the essential services to the best of their abilities.

This brings me to my second point – due to reduced traffic from customers resulting in a significant drop in revenue, some establishments have requested for reduction in contract fees from their service providers.

While it is understandable that service buyers who are affected by the COVID-19 situation are finding ways to cut costs, I hope this Bill will compel service buyers to work with their service providers and work out a win-win solution for both parties. Should they wish to scale down the essential services and contract fees, they should be pragmatic, fair and understand that it would mean a reduction in service frequency or standards.

While service providers would like to help their clients manage their cost, they also hope that the service buyers give them ample time to do the necessary adjustment. One cleaning company shared with the Union that his company was asked to reduce his cleaning workforce by 92% from a workforce of 100 to only eight cleaners within a very short frame of time. In another case, a well-known landscape company had been given a stop work order for the maintenance of plants by some of their commercial clients during the circuit breaker period. No service payment will be made during this period.

Such cases are faced by many service providers of essential services. These companies are trying very hard to redeploy their workers but, it has not been easy. Such unilateral decision is unfair, and I would like to suggest for the Bill to look into such issues.

I have also received feedback from unionised companies about their service buyers wanting to reduce their contract fees by 10% to 20%, simply because the service buyers perceived that their service providers would be able to do so due to the wage subsidies they would be receiving from the Enhanced Jobs Support Scheme.

Despite the cleaners or security officers having to work extra hard, these service buyers want to squeeze their service providers. This is simply incredulous!

The wage subsidy is meant to relieve financial pressures on companies as they weather the storm; and not be used as a lever for anti-competitive practice. The reality is that it can be difficult for the management of the service providers to voice their objection for fear of having their contract terminated or be in a less favourable position during contract renewal in future but, neither do they have the finances to pay for the workers under their employment if there is no payment of contract fees.

I would like to urge service buyers and service providers to be responsible because any unethical action on their part will affect the outsourced workers who are trying to earn an honest living. Please allow me to speak in Malay.

(In Malay): [Please refer to Vernacular Speech.]: The COVID-19 pandemic has caused major disruption to businesses and workers' livelihoods in an unprecedented way and with much uncertainty when this crisis will end.

The sudden announcement by the Malaysian government imposing a Movement Control Order has affected many companies in Singapore that rely on them as part of their workforce. In addition, the Singapore Government has introduced stricter measures to contain the spread of the virus, including social distancing, closing borders to inbound visitors and implementing the circuit breaker from today.

Hence, I hope this bill will stop service buyers from imposing any liquidated damages for any shortfall in service standards or a reduction of manpower of manpower at the work site.

While it is understandable that service buyers who are affected by the COVID-19 situation are finding ways to cut costs, I hope this Bill will compel service buyers to speak to their service providers and be reasonable to work out a win-win solution.

I would like to urge every service buyers and service providers to be responsible because any unethical action on their part will affect the workers who are trying to earn an honest living.

I believe that it will be our spirit of solidarity, peppered with a lot of empathy and compassion that will pull us through this crisis.

(In English): Together with the support of our Government, let us all do our part to support our businesses and workers and we shall overcome as SGUnited. I am confident that workers, employers and Government will stand united and ready to fight this virus. I believe it would be our spirit of solidarity peppered with a lot of empathy and compassion that will pull us through this crisis. I support the Bill.

5.50 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): Mr Deputy Speaker, Sir, I commend MinLaw for expeditiously introducing this emergency Bill to offer further temporary reliefs to businesses and individuals impacted by COVID-19. In particular, this Bill specifically helps those who may be unable to meet their contractual obligations due to COVID-19 as well as the related public health measures imposed in Singapore and around the world.

This legislative measure not only helps provide temporary cash-flow relief to businesses and individuals, it also avoids the problematic situations of damages claims, forfeiture of deposits, costly litigation actions, premature insolvency proceeding, termination of leases; among others. In this very difficult time, the last thing we want is to be embroiled in legal tussles.

With the stepped-up circuit breaker measures being introduced this week and further impact to businesses, these relief measures would now be even more needed.

In many other jurisdictions such as US, UK, Australia and Germany, similar temporary measures have also been implemented in various forms due to COVID-19; such as moratorium on evictions, quasi force majeure. In some jurisdictions, it is by way of Executive Order.

Sir, I will comment on a few aspects of the Bill. Firstly, the relief measures are temporary. The key word in this Bill is that the protection and relief from legal actions in those areas prescribed are temporary in nature. The Bill mentioned the relief tenure as six months in the first instance; which can be extended by the Minister. And there is also sunset clause that the Bill will cease to have effect after one year.

This is an important fundamental feature. We still want to uphold the sanctity of contracts. The Minister has also emphasised in the Second Reading speech that the new laws do not absolve or remove contractual obligations but merely suspend them for a prescribed period so that more time can be given to both contracting parties to work on a resolution.

While clause 5(3) of the Act set out the list of prohibited actions, can I ask the Minister if the Act also prohibit the other party from imposing interest or late penalty fee for non-payment of rents during this relief period?

Sir, notwithstanding this new law, we should encourage contracting parties to work amicably and sensibly to resolve the challenges faced and work on joint mitigating measures. In the event of disputes, I understand that the Law Minister have appointed a pool of 100 Assessors to assess and determine disputes in a fair and objective manner; with no recourse for appeal. Parties are also not allowed to engage lawyers. The Assessors are pivotal here. They are a very important neutral party and have the final say in their ruling. Given the powers accorded by this Law, can I ask the Minister who are these Assessors and what are their credentials? How do we choose those Assessors?

Everyone is impacted by COVID-19 one way or another. When one party gets the relief or protection, the other party’s financial or cash flow situation could become more dire because of the non-collection rental from tenants, for example. We could potentially see a chain effect if each party seeks the relief upstream; although the overall impact across the economy would be limited as this relief measures only apply to a specific period of non-performance after 1 February 2020 and does not apply to contracts entered on or after 25 March 2020.

Also, when the rental arrears begin to pile up, the risk of a bigger rental default by the party seeking the relief would also increase six months down the road.

Our economic agencies like ESG may need to consider other assistance measures to help some of these companies including providing financing support schemes for a longer instalment repayment plan, for example.

Sir, on events and tourism-related contracts, the additional relief against forfeiture of the deposits for events and tourism-related contracts; if deem just and equitable, would be welcome by wedding couples. I hope that most hotels would agree to the change of dates when requested; even if they have not done it on a goodwill basis.

I met a constituent at my Meet-the-People Session last week, who runs an event company. He said that such relief measures would actually put his company and him in a difficult spot. Since the COVID-19 outbreak, there were a number of cancellations of events and he still have his overheads to cover. The deposits that he collected are actually meant to be sort of his safety net but he now may not have them anymore. I have advised him to apply for the Self-Employed Person Income Relief Scheme although he said while he is grateful to the Government for this Scheme is helpful is unlikely to get him out of the dire state.

One concern I have is whether this non-forfeiture of deposit will lead to counter actions where service provider now may insist on an upfront payment or price the risk of non-forfeiture of deposit in the fees that they charged. So, we have to be mindful of such counter actions when they come.

Sir, the COVID-19 pandemic has a severe impact on the multi-billion construction sector. The various public health measures, border controls, shortage of manpower and supplies can all lead to delays and cost overruns in construction projects. If these delays resulted in hefty penalties, it could put contractors in a tenuous position.

In Singapore, due to the intense competition in this sector and the tender system, the terms of most construction contracts tend to favour the developers. Most contracts do not have specific clauses that clearly allow a contractor to seek relief. Whether the impact and disruption from COVID-19 constitute a force majeure situation actually remains to be tested and established. Hence, this Bill which provides reliefs from liability of non-performance is most in need under current circumstances to help especially the smaller construction companies cope with the crisis.

Trying to keep up with the servicing of the loans and hire-purchase by banks and finance companies is another stress point companies and self-employed person faced during this period.

Here, I declare my interest that I work in a financial institution.

I detect the careful calibration of the measures here in the Bill, primarily focusing on financing that are backed with security, such as loans secured against property or plant, machinery and other equipment. These asset-back loans tend to be better credit and hence a lower potential loan loss ratio.

Also, there will be follow-on economic ramifications if such assets like machinery and equipment are being seized, as it may result in further disruption to the business ecosystem which works on interdependency.

I hope that the Assessors beside determining the relief could also direct a process to restructure the loan that is to mutual benefit of both parties. I hope there is also prohibition for late payment interest or charges in this Bill.

Sir, in conclusion, this is a necessary measure in this extraordinary times. Kudos to MinLaw, MTI, MOF and the relevant stakeholders for turning this Bill around in such a short time. Sir, I support the Bill.

5.59 pm

Ms Joan Pereira (Tanjong Pagar): Mr Deputy Speaker, Sir, the COVID-19 pandemic has sent shocks through economies around the world, including Singapore’s, with an especially severe impact on SMEs, small retailers, including provision shops, mom and pop shops, and food service providers – restaurants, "kopitiams" and hawkers. With the latest circuit breaker measures, their businesses will be hit even harder.

A survey conducted by Chope, an online dining-reservation booking platform, found that 78% of the restaurants involved were not prepared to last longer than six months if the current situation does not improve. Eighty percent are reducing staff to cut costs and about one-third have asked their full-time staff to take compulsory leave.

A few days ago, a Straits Times article reported on how severely retailers in our heartland malls, such as JCube in Jurong East, Lot One in Choa Chu Kang and the Star Vista in Buona Vista have been hit. These shops tend to rely heavily on in-store sales for their revenues and the recent movement restrictions therefore have a heavy impact. Some of these shops have seen a reduction in their sales of up to 90%.

All these business declines have a domino effect and multiplier impact through our entire eco-system. When the revenues for these businesses dry up, their employees' wages dwindle, reducing their ability to spend on goods and services and thus, in turn, affecting other businesses as well. Landlords, lenders and investors are also affected. Landlords would have trouble collecting rentals and consequently, their lenders and investors like banks, finance companies, corporations, shareholders and other individuals would end up with non-performing loans and investments.

I am happy to see the various measures that the Government is rolling out to mitigate the deep impact on our SMEs. SMEs play a very important role in our economy. They account for over 65% of Singapore's employment and contribute almost $200 billion, or 49%, to our economy. We must continue to support them as they will be the future drivers of our growth, especially if they are able to exploit regional and international opportunities.

COVID-19 is an unprecedented crisis for our generation. Without sufficient support, many otherwise flourishing businesses with good foundations might go bust and this will hamper the growth of our economy as a whole. I strongly believe that we will all recover from this pandemic. It is not if, but when. When the crisis is over, it will be a different world and we have to be ready to seize the new opportunities on the horizon. We cannot afford to have a large number of small business owners being embroiled in litigation and insolvency proceedings. They will become a drag on our economic recovery.

This Bill will give SMEs the breathing room to examine the way they do business and revamp. They will not need to worry about fire-fighting and their immediate future. Hopefully, the temporary measures will provide them a reprieve, giving them the space and energy to review how they could change their business models and emerge from the crisis stronger.

I also hope that the bigger players – landlords, banks and finance companies – will continue to see their relationships with SMEs as one of partnership. When the SMEs do well, they will also do well. I hope that this understanding will underpin the future discussions that are needed between landlords and tenants, banks and borrowers, to chart a way forward.

Finally, I would like to ask whether the Government is putting in place any other mechanisms to monitor the situation of smaller businesses so that, if need be, further action can be taken to save viable businesses. Sir, I support the Bill. Thank you.

6.04 pm

Mr Chong Kee Hiong (Bishan-Toa Payoh): Mr Deputy Speaker, Sir, I declare my interest as the Chief Executive Officer of a real estate investment trust. I have interests too in businesses that are tenants in malls.

During these very difficult times, the Government has rolled out a suite of measures to minimise the financial impact of COVID-19 on individuals and businesses. I understand and support the intention of these measures, which aim to mitigate the financial stress experienced by businesses, big and small.

I fully support the proposed legislation to ensure that landlords pass down the property tax rebates fully to tenants. This is a move in the right direction and in line with the spirit of collective responsibility to overcome COVID-19. That would be very helpful to tenants, especially the SMEs, micro SMEs and individual proprietors.

This Bill also seeks to protect, amongst others, commercial tenants from court and insolvency proceedings and termination of leases for a period of six months from the commencement of the Act. Understandably, rentals and wages are two of the more significant costs of running an enterprise. However, I would like to request for the Ministry to take a more comprehensive and long-term view of the impact of these measures on the entire economic value chain.

This Bill whilst easing the cash flow of tenants that choose to defer the rent payment, does not go further to regulate the repayment of the six-month rent and the interest on late payment. In effect, landlords can demand immediate repayment upon the expiry of the rent deferment period. Businesses would not have improved multiple folds to enable the tenants to pay the arrears immediately.

The purpose of the Bill is to provide tenants time and space so that their businesses could recover from the COVID-19 situation but the Bill as it stands would only defer the issue further down the road. Hence, to better protect the tenants, the Bill should also legislate the repayment terms upon the expiry of the rent deferment period and the interest charged. The Bill should also give guidance on leases with expiry dates that fall within the deferment period.

The rent deferment measures will provide temporary but essential relief for many businesses. For those which are healthy and viable, the measures will provide a reprieve against the sudden impact of the pandemic. Ideally, they should take this opportunity to urgently restructure and update their operations and business models to become more effective and productive.

My concern is that the temporary rent deferment measures may inadvertently result in some companies over rely on a short-term relief and neglect taking the painful but necessary steps to revamp their operations. Such companies may instead hope for an upturn and postpone figuring out their next move to only six months later. Some businesses were in fact, already unviable before the onset of COVID-19, and had been having difficulties paying their rent. Hence, this measure merely serves to prolong the last breaths of untenable businesses. The cumulative costs of their final months will end up being passed to their landlords.

Lease termination for such unviable tenants will release the affected properties back into the market for other businesses that may want to take advantage of the weaker rental market to set up shop. This is a more organic and sustainable model for the real estate industry. We should not impede the emergence of new start-ups with potential.

As it is, this Bill creates significant uncertainty for landlords. I believe that for landlords to be constructive in their assistance to tenants, landlords need to have clarity of their cash flow and strength of their balance sheet. Rather than working out how to address delays in or non-payment of rent which affect their ability to service mortgage payments, they can plan additional relief for tenants with greater confidence in their financial position. This will be of tangible help to viable businesses.

As Deputy Prime Minister Heng cited in his speech, there are landlords who have given additional rental assistance over and above the property tax rebates to tenants.

It is important to recognise the mismatch in the obligations of tenants and property owners. The landlord's collateral with the bank is the property whereas the tenant's lease collateral is a security deposit of between one and four months. This security deposit is insufficient to ensure that the tenants pay after the six-month rent deferment period, which may be extended to a year. In the worst-case scenario, when the tenants go bust after six months, there is little that the landlords can do to recover their outstanding debts.

In reality, landlords have little legal recourse when a private limited company goes belly-up. In short, the landlord will be left holding on to the bad debt. Smaller landlords who have less resources, including individuals who own shops or strata titled offices, would face challenges meeting their obligations to their banks. They face collapse of their businesses with employees losing their jobs and them losing their properties to the banks.

Hence, in fairness, I appeal to the Ministry for this deferment measure to be implemented for a shorter period such as three months with extension, as determined by the Minister so that risks are more balanced out between landlords and tenants.

At this point, we do not know how many companies will take up the option to defer their lease payments for six months. Rental income is the landlord's main source of cash flow to pay for mortgages and interest. However, if many companies do take up this option, there are significant implications for our banking and financial system.

This may result in landlords breaching covenants, such as interest cover ratio, related to bank loans and other debt instruments, which would result in an event of default where loans will be immediately due. Landlords will also have no further access to credit lines to meet their operational needs. Banks will have higher non-performing loans. While this Bill provides temporary relief to SMEs, this relief is not extended to larger landlords who face the same issue of covenant breach and loans being called by the banks.

As responsible enterprises, landlords would go into a cash preservation and survival mode, with cuts in maintenance expenses, wages and reduce distribution to investors. S-REITs, as institutional landlords and which represent a cornerstone of the Singapore investment landscape would be in a similar situation of financial stress. As an example, SPH REIT had announced a 78.7% year-on-year decline in its distribution per unit despite a 12.2% increase in Income Available for Distribution. They are basically holding back cash in anticipation of worse situation.

More than 200,000 retail investors in S-REIT units valued at more than S$15 billion, are our ordinary man in the street – retirees, employees, homemakers and even students. They have come to depend on S-REIT distributions to supplement their retirement and household income. The impact of this Bill will cascade down to individual retail investors, who in turn are also consumers. This could lead to sentiments of increased pessimism and caution, dampening domestic consumption and spending and result in even less business for the tenants which the Bill intends to assist. It is therefore important, that we balance the needs of this group of people even as we help our tenants weather through this difficult time.

We hope the Minister would consider expanding the Temporary Relief from Actions for Inability to Perform Scheduled Contracts to include all real estate companies, excluding residential and for all loan types, to mitigate the potential implications as mentioned above.

In conclusion, we recognise that these are extremely trying times and we fully agree with Minister that more than ever, we need to work together to ride out this challenging period as no one is spared from the impact of COVID-19. We hope that the Minister further consider these implications and strike a balance in mitigating the challenges that all parties are currently facing.

6.14 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Deputy Speaker, Sir, in this uncertain times, I welcomed the move to offer some certainty and stability to individuals and firms who have been hindered from carrying out contractual obligations, as a result of the COVID-19 outbreak. Plenty has been said and done about help for the vulnerable and low-income. With this Bill, our middle income Singaporeans and above may find some relief as well as employees who are working for them.

Among them are entrepreneurs, small-time business owners, SMEs and sole proprietors. Many of them have to sustain financial obligations, but fear that they may possibly have to fold their businesses or declare bankruptcy. These measures will go a long way in helping to tide them over and keep them afloat during these tough times. The element of fairness is embedded in this Bill as COVID-19 is an unexpected event that affects the ability of businesses and individuals to perform contractual obligations, and there is targeted protection from legal action providing cash flow relief for impacted sectors.

However, this Bill and its enforcement only allows temporary relief from the effects of COVID-19 while still upholding the right to exercise contractual obligations. On the issue of fairness, my speech largely touches on how this bill would help the tenants and customers. However, at the onset I would like to also mention that the other side of the contract – the landlords and the other party in the contractual obligation should also be taken into consideration.

As mentioned previously, by hon Member of Parliament, Mr Chong Kee Hiong, in the case of leases or licences for non-residential property, this Bill ensures no termination of leased licence where non-payment of rent is due to a COVID-19 event. However, the impact on the landlords, for example, in the case of real estate investment trusts or REITs, may also have an impact on retail investors invested in these REITs and thus, Singaporeans will have some exposure in the eventuality that the tenants are not able to pay the rent at the end of the six months or duration stipulated. The negative feedback loop is something to take into consideration for both sides of the contractual obligation.

In addition, we should also ensure that these measures for deferred payment for six months do not lead to a moral hazard or negative externality issues, where tenants who are already facing trouble take the opportunity to delay payments or lead to non-performing bank loans, causing potential issues, in the future, in the banking system. Mr Deputy Speaker, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Among those undeniably affected are young couples who are looking forward to their wedding and starting a new life together this year. But what should have been a happy event has turned into a stressful and worrying time, because they are scrambling to contact various service providers to discuss the fate of their down payments or instalments.

How will they be protected if they cancel their bookings for their big event? Are the deposits protected under the new legislation only relate to hotel bookings or does it include event companies that are organizing the ceremony? How about companies that provide floral arrangements, bridal cars, videography and photography services? The deposits have been paid but the event will not take place. Can these contractors or companies insist that the contract must be postponed to another date and cannot be cancelled?

I have spoken to some young couples who voiced their concern about this situation. Unsurprisingly, some of them saved a huge amount of money for their wedding only to realize, after all that, financial prudence is key. In fact, for those considering postponement, the venue owners are unable to provide any date for their premises to re-open, and therefore it is difficult to come to any agreement with the other service providers.

Therefore, some couples hope to get back their deposits, but these requests has been rejected. They were instead asked to convert their payment into credit for other events or even look for another couple to take over their wedding package. Hence, moving forward, this Bill will hopefully provide some financial help for them. On that note, we welcome this Bill.

(In English) Mr Deputy Speaker, I would also like to ask about events slated in the later part of the year, particularly in the year end. There are always plenty of events in the festive period. Most of them are regular annual offerings, whether it is for Christmas, for travel, for the school holidays, and so on. Because this is the peak period for events, venues and services often have to be booked far in advance, sometimes as early as the first half of the year. However, the new regulations only apply to contracts entered into before 25 March.

May I ask the Minister or Ministers what is the advice for event organisers going forward? Is it wise to start committing resources to future events or should everyone put all plans on hold until there is significant improvement in the virus situation? Would it be responsible of service providers, for example, an event venue, to market their services and accept deposits without clear knowledge of whether it would be legal to host the event on the stipulated date? Can the Government consider protection to contracts for such events, especially those that are being held annually?

Even before stricter measures were imposed, many businesses and individuals had voluntarily cancelled or postponed the events at the expense of their own pockets. Some couples were about to cancel their wedding venue bookings and opted for a smaller venue for more intimate gathering or even tapped on live streaming. Some events do cancel their bookings of physical space in favour of a digital or virtual concept. So people have adapted in advance. I wonder if the Government will consider making some concessions for them, should they make an appeal. After all, they opted for the difficult choice of cancellation out of goodwill for the fellow Singaporeans when postponement was not an option before this Bill came out.

How many disputed contracts does the body of Assessors expect to see to and how long would applicants have to wait for their turn? Are there any other qualifying factors such as the scale of the event and contracted amount involved? Finally, during these times, I believe many businesses will have to take loans. Will their inability to fulfill contractual obligations count against their credit ratings and future ability to take on other contracts, in particular for SMEs?

Next, on ensuring commercial landlords pass property tax rebates to tenants. I am relieved to note that it is now mandated by law for commercial landlords to pass property tax rebates on to tenants and in a timely manner. This is necessary because there has been feedback about landlords not doing so and many Members of the House have mentioned this earlier. The benefit may be passed on a single method or combination of methods, including but not limited to payment of money by lump sum or way of instalments or an offset against rent or licence fee payable by tenant.

For payments and other methods, what sort of documentation will suffice as a form of reference and evidence within this Bill? Would it have to be a formal contract or would a payslip do? What also is the longest period of instalment that can be made? Is there a minimum sum of rebate? So, those are few questions asked. I am concerned that without specifications, landlords may circumvent this with a token sum or long drawn out instalment period that serves little practical purpose to help the tenant. I also note that the fine of $5,000 on property owners guilty of the offence is quite low and the deterrent effect may be too insignificant.

Indeed, section 29 states that IRAS gives property tax remission to certain landlords. It also obliges those landlords to pass on the benefit of remission to tenants. In practice, this is usually about 12% of annual rent. So if a landlord fails to do this, it is an offence. However, we can have a situation where in early March, a landlord, out of sympathy for its tenants, reduces their rent, say, by 30%. The landlord will get his property tax remission but he must pass it on to his standards. So, his tenants get double benefit and the landlord, having acted generously earlier, gets none.

The question is, must this landlord still pass the benefit of the property tax remission to his tenants – section 29 states he must – or is this something which he can dispute under section 30 of the Bill?

My next point is on the bankruptcy limits. The revised limits of bankruptcy applied to individuals and businesses are timely and should help them during the six-month period. However, individuals and businesses must be reminded that the section 5 temporary relief is only a moratorium. After the prescribed period, the whole sum that was unpaid will become due. I think we need to reiterate this point to those that are utilising this deferment period within this Bill.

Businesses should use the prescribed time to work out longer-term adjustments with their landlords. Otherwise, they may face the risk of ballooning debt once the prescribed period is over. Businesses should utilise all other assistance – salary subsidies that have been given out in the Budget, but this moratorium would be a meaningful supplement, nonetheless.

In concluding, I wish to take this opportunity to call for more support and empathy for the middle-income Singaporeans and also Permanent Residents or PRs, who have contributed significantly to our national reserves. If there will be a further package or new relief schemes, please let them be eligible for more help. Some are still reeling from the effects of a weakened economy previously and now, with COVID-19, there are people who have been jobless or intermittently jobless for more than a year while struggling to sustain financial and family obligations on their savings. I understand that there is always help available to those in need on a case-by-case basis but they should not be made to go through a significant amount of red tape to receive it.

The Unity, Solidarity and Resilience Budget that has been released by Deputy Prime Minister Heng today actually shows a wide range of help for various groups. But I think over time, if the virus outbreak worsens, they are definitely going to need help. It is a grave time for everyone, but the Bill addresses many pressing concerns and will restore some confidence. Sir, I support the Bill.

Mr Deputy Speaker: Mr Louis Ng.

6.25 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I stand in support of the Bill. The number of COVID-19 cases worldwide has exceeded a million. Locally, cases have succeeded 1,000. While the fight continues to limit the number of cases, it is important that the economic and practical impacts of the pandemic be addressed. This current Bill drafted under considerable pressure and sought to be passed on an expedited basis goes a long way towards addressing that. I have five points to make on the Bill.

My first point is on the deferment period for the rent repayment for commercial tenants. Sir, I received the most feedback about this first point. People support this but hope that additional measures will be introduced. Clause 5 of the Bill provides a moratorium for the termination of a lease or licence of property for non-payment of rent for the prescribed period of six months. This will apply to non-residential properties. While this is intended to create some breathing space for commercial tenants, rent will still accrue and will be payable at the end of the six-month period.

Many are appreciative that we are proposing this but some do not feel much relief from this protection. One of my residents who is a shop owner shared her concerns with me. Her current monthly rental is $8,000 and she told me that at the end of six months, she would have accumulated $48,000 in rent. Even if she has some relief from paying the rent for these six months, it is unlikely that her business will have fully recovered by that time and she is unlikely to be able to pay off this $48,000 in six months' time. She told me that she might as well wind up her business now.

I can understand her concerns. We need to remember that not only do tenants face the very real risk or possibility of winding up, landlords also faced significant risks if tenants are unable to pay at the end of six months and have no choice but to wind up. The Straits times has already reported that retail sales have dipped by up to 8.6% in February alone, at the start of this crisis, before further measures have been taken. With the circuit breaker measures requiring all non-essential businesses to stop operations, commercial tenants are likely to be hit harder than ever.

As Minister Vivian noted in his media interview, Singapore took four months to pass the SARS outbreak and six months to recover from its economic impact. He then said that, "This problem and its aftermath, the economic aftermath, is going to last at least a year". Our relief efforts need to take into account the reality that it will not be business as usual after six months.

Will the Minister consider an extended period for repayment of rent accrued in these six months? Can we allow tenants to repay this outstanding amount via monthly instalments spread out over a period of time? This would increase the chances of repayment to landlords and of businesses surviving.

This has already been done in Germany. The German government similarly passed a Bill to mitigate the consequences of the COVID-19 pandemic. Under the German Bill, landlords may not terminate lease agreements solely on the grounds that a tenant failed to pay its rent during the period from 1 April 2020 to 30 June 2020. Tenants will have until 30 June 2022 to pay back the rental arrears accrued during this period.

Can we consider a similar measure in Singapore, which would benefit both landlords and tenants?

My second clarification relates to the transfer of benefit of property tax remittance from landlords to tenants.

Clause 29(1) requires a landlord to pass the benefit of any profit tax remission related to COVID-19 on to the tenant. It is not clear from the Bill that tenants will be required to pass on this property tax remissions to sub-tenants and sub-licensees. A significant group that may fall through this gap is users of co-working spaces that lease or licence the space from co-working companies as sub-tenants and sub-licensees. The Business Times reported in September 2019 that co-working spaces take up 3.7 million square feet of Singapore's commercial space and it is one of the top six occupier sectors.

Can the Minister clarify whether the benefits from property tax remissions will have to be passed on to sub-tenants and sub-licensees.

My third point is a recommendation to alleviate the rental burden on tenants. While larger landlords like CapitaLand and Mapletree have announced rent alleviation for their tenants, many other landlords have not. If the economic impact proves to be extremely dire and further remedial measures are needed, will the Minister consider looking into mandating a degree or rent abatement for the tenants?

I understand that landlords are not exempt from the effects of the pandemic. However, some are more financially capable of weathering the crisis than others, and measures are required to ensure that economic impact is equally distributed. Rent abatement measures, if necessary, can be calibrated. It can be targeted at larger landlords who are in a better position to shoulder some of the economic losses and smaller tenants who have greater need for such relief.

6.30 pm

My fourth point relates to assistance to freelancers from contractual obligation, in particular, obligations under long-term vehicle leases. Clause 5 of the Bill will help individuals who are unable to meet their obligation under a hire purchase agreement for commercial vehicles for the prescribed period of six months. Commercial vehicles are defined under the Schedule of the Bill. However, the definition of commercial vehicles does not appear to extend to freelancers, such as property and insurance agents, who leased their vehicles for business-related activities.

This concern was raised to me by a resident who is a property consultant who uses a car for property viewing and business-related activities. Her car is on a long-term lease. Her business has been affected by the pandemic but it is not feasible for her to cancel her long-term lease as she would need the car to recover from this downturn. She has requested that the vehicle leasing company defer her monthly lease payments for a few months until her cash flow has stabilised. However, she was informed by the company that as the Government did not announce any measures relating to vehicle leases for freelancers like herself, the company did not know how to help her and was not obliged to do so either.

Freelancers like this resident need all the help they can get right now. Can the Minister share if there are plans to provide some relief for freelancers from their business contracts, including obligations under long-term vehicle leases.

My final clarification has to do with factual witnesses giving evidence through remote communication technology in Court proceedings. Clause 28(2)(b)(ii) provides that parties' consent must be given for a factual witness to give evidence through remote communication technology. In contrast, consent of parties is not a prerequisite for expert witnesses to give evidence through remote communication technology under 28(2)(b)(i).

I can appreciate that a possible reason is that it is more important for the Court to be able to see the body language of factual witnesses in person as opposed to independent expert witnesses. Body language may not come across fully through remote communication technology. Having said that, there are a number of cases that would involve overseas witnesses and there is no telling how long border restrictions will be in place.

Lawyers have expressed to me the concern that trial timelines will be unnecessarily prolonged and the backlog of cases may result if parties unreasonably withhold consent to the use of remote communication technology for factual witnesses.

Can the Minister clarify if the Court would have oversight over the reasonableness of a party withholding consent to the use of remote communication technology for factual witnesses in appropriate cases? If so, can the Minister share how the oversight will be exercised?

Sir, I understand the Government is doing its best to extend assistance to as many Singaporeans as possible. I like to thank the Government for all its efforts and hope my recommendations can be considered. Sir, I stand in support of the Bill.

Mr Deputy Speaker: Mr Murali.

6.33 pm

Mr Murali Pillai (Bukit Batok): Mr Deputy Speaker, Sir, I like to first declare my interest as a lawyer in private practice who has been approached to provide advice on this Bill in draft before it was introduced in this House today.

I rise in support of the Bill. I join hon Members who spoke before me to commend officers from MinLaw, MND, MOH, the Attorney-General's Chambers and top practitioners from private practice for working together and coming up with this Bill so quickly in nine days. This is an excellent example of the spirit of SG United in action.

As mentioned by the hon Minister for Law, the introduction of this Bill on a Certificate of Urgency is precipitated by the most serious crisis our country has faced since Independence. It is worth repeating that the focus of this Bill is to ensure the economic survival of contracting parties affected by the COVID-19 event, particularly the individuals and small-and-medium enterprises. I agree, therefore, that the current circumstances are exceptional to justify intervention into the hallowed principle of sanctity of private contracts and the rule against retrospective application of laws. The hon Minister shared a precedent in the form of the Frustrated Contracts Act which was put into effect in February 1959 but applied to all contracts, even those entered into before the commencement date of the statute. Coincidentally, the subject matter of the Frustrated Contracts Act also deals with intervening unanticipated events affecting contractual obligations.

I would like to raise six points in my speech, most of which deal with statutory interpretation and, therefore, likely to be quite dry and only interest the lawyers in this House. To make up, I will end with the suggestion application on what could, perhaps, be considered in future. Hopefully, that will interest more Members.

First, categorisation of scheduled contracts. I agree with the drafting approach in this Bill of providing relief to scheduled contracts described in the schedule. This promotes certainty. The other option would be to just have provisions of general application. This would cause major confusion.

I am glad to note that, under clause 18 of the Bill, it is proposed that the Minister be given powers to amend or add to the schedule. Given the uncertainties we face, this makes eminent sense. I would like to ask the hon Minister what are the guiding principles upon which he would exercise this discretion that is proposed to be vested in him.

Next, the wording in clause 5(1)(a) of the Bill. Clause 5, in my personal view, is the critical provision in this Bill, as it stipulates three conditions pursuant to which temporary relief from contractual consequences may be obtained. I seek clarification on the phrase “unable to perform an obligation”. This is one of the primary triggers to get temporary relief. Is the word "obligation" referring to a contractual obligation or is it in relation to an obligation in general having regard to the purpose of the contract?

Let me illustrate by way of an example. Let us deal with a contract dealing with a wedding dinner in a hotel. The bride and groom’s obligation would be a payment obligation in which it may not be affected by a COVID-19 event as they would have set aside money for their wedding. Read literally, they may not get relief if the obligation that they have is only a payment obligation. But that would be onerous. I understand the intention is to give relief to the bride and groom in such a parlous situation.

Given the wording that is used in statute, I seek a clarification as to whether the obligation referred to in the clause is wider than the contractual obligation and should be referenced against the purpose of the contract that is objectively known to contracting parties.

I also would like to ask whether the clause is intended to apply on a mutual basis.

Again, to illustrate, staying on the example, say, for example, if the hotel’s workers are all serving quarantine orders and, therefore, they are unable to proceed with the wedding dinner. Can the hotel also take advantage of the clause? If I am right, based on the definition of scheduled contracts in the Schedule, any company, not just SMEs, may use the measures in this Bill in relation to scheduled contracts, save for the finance-related contracts. May I please clarify whether this is, indeed, the intention? If so, may I please ask why the hotels, which are naturally big boys, need to be protected under this Bill?

Next, I turn to clause 5(1)(b) of the Bill which deals with the second condition – “inability to a material extent caused by a COVID-19 event”. I wish to clarify the meaning of this phrase. I anticipate that Assessors appointed under the Act, once passed, will spend a lot of time on the meaning of this phrase. In law, we have concepts, such as “causa causans” which is the immediate cause or the last link, or “causa sine qua non”, which is the cause that contributes to the loss even though it is not direct.

I would like to ask whether these concepts are meant to be triggered here. Or is the intent to provide relief even where there are more than one reason leading to a party being unable to perform an obligation in contract so long as the COVID-19 event is an important or significant reason.

I now turn to clause 6 of the Bill. I support the intention behind the clause which is to prevent the owner or developer under a contract to call on a performance bond in relation to a “subject inability”, which is defined as the inability to a material extent caused by a COVID-19 event. What is not clear is when this obligation is triggered.

Under clause 5 of the Bill, it is stated that that the temporary relief kicks in upon satisfaction of three conditions, which include a notification under clause 5(c) to the other party. This notification requirement is not specifically stated in the clause.

May I please ask whether this notification requirement has to be fulfilled before the obligation under clause 6 is triggered? If so, would there not be situations where the owners or developers may act to call on bonds before being notified? Now, this is not necessarily an unusual situation because the party that is unable to perform the obligation is not the party to the performance bond because that is between the employer and the bank. It seems to me, however, if that happens, such acts may thwart the legislative intention behind the Bill. It may well be unconscionable conduct on the part of the owner or developer which ordinarily provides grounds to restrain payment under the bond. I would welcome clarification from the hon Minister on this point.

Next, I go to the reference to arbitration under clause 5(3)(b) of the Bill. As mentioned by the hon Minister, as part of the temporary relief measures, it is contemplated that defaulting parties cannot be subject of Court proceedings as well as arbitration. May I please ask why is there a need to circumscribe arbitration to only that which is governed by the Arbitration Act instead of stating arbitration seated in Singapore?

In my personal view, arbitration seated in Singapore would be more consonant with the equivalent provision that deals with "Court" proceedings under clause 5(3)(a) of the Bill, which, taken together with the Interpretation Act, would mean "Courts of competent jurisdiction in Singapore".

Also, we should note that categories of scheduled contracts are not closed. Should the Minister extend the schedule to cover trading contracts, for example, there could be international companies involved which means that these companies could possibly commence international arbitration which is governed by the International Arbitration Act (IAA), thereby escaping this provision. Also parties to domestic arbitration may have opted into the IAA regime, thereby, again possibly escaping this provision.

My final point, Sir, is in relation to an area not specifically covered in this Bill. This Bill contains provisions for holding of general meetings of companies and Court proceedings using remote communication technology. I read a Guardian article dated 31 March 2020 in which it was stated that the UK Ministry of Justice is looking at temporarily relaxing the rules on two witnesses required under the Wills Act as UK self-isolates. I appreciate that the two-witness rule in Singapore is put in to guard against fraud. In this day and age when we have Singpass for a whole host of digital services, this fraud issue could be contained to some extent.

In the event the COVID-19 event extends to a longer period of time – and, Mr Deputy Speaker, Sir, I am touching wood at this point in time – I recommend that the Minister for Law consider looking into digitising Wills. This should also apply to LPAs, too. In the meantime, I note that for this four-week period where generally all persons are to work from home, there is a carve-out in the Government measures that allows lawyers to provide drafting and execution of Will services as they constitute essential services. This is eminently sensible.

Notwithstanding my comments, I support the Bill.

6.44 pm

Mr Douglas Foo (Nominated Member): Please allow me to declare my interest as Chairman of Sakae Holdings, President of the Singapore Manufacturing Federation (SMF), Vice-Chairman of the Singapore Business Federation (SBF) and Vice-President of the Singapore National Employers Federation (SNEF).

Since COVID-19 first became a major concern in Singapore, life has been riddled with much uncertainty. As the COVID-19 situation worsened over the last couple of months, people concerned with events, for example, have been brought on many different roller coasters. Is the event cancelled? No, the event is not cancelled but will be limited to less than 40 people. A few days later, the event was reduced to 10 persons, with distancing measures and, a few days later, the event was postponed or moved to virtual means. But I must commend my fellow Singaporeans for being understanding and reasonable to bear with such uncertainty. It is definitely not ideal for legal instruments not to be clear.

Over the last few weeks, Trade Association and Chambers (TACs), including the Singapore manufacturing Federation (SMF) have arranged for lawyers to give informative talks to our members on matters such as for "Fall, Merger and Frustration". It must have been frustrating for many, forgive the pun, that relief or threat of legal action depends on what is worded in the contract when the totally egalitarian COVID-19 virus does not discriminate between a super large organisation and a one-man show.

This Bill now moves to bring a certain degree of clarity and uniformity in this unprecedented times is indeed welcomed by many in the business community. It is also opportune to add that by moving decisively and quickly in introducing this Bill, MinLaw is once again demonstrating its commendable foresight and dynamism. It is also creative thinking at its innovative best to use the law in such a manner to bring relief to the people and the community.

While we are mired in extraordinary times and it is imperative that we work and live together as a community. It is only if we go to the extra mile and practice consideration for one another that we have a higher chance that larger swaths of our societal fabric will be able to tide through this circumstances. I believe that many businesses know this concept inherently, but lack a framework or a former channel to practise some form of legal leniency and yet still, protect business interest. Hence, I rise in support of the Bill and commend the Whole-of-Government approach to COVID-19.

Targeted protection from legal action is cited as one of the main objectives for the Bill. I believe this is crucial as the cash flow exposure for contractual obligations that they are now unable to fulfil weigh heavily on the minds of many business owners. Under this Bill, five broad categories of contracts are identified and I stand by the decision to prioritise relief measures to address conflicts arising from these five areas.

Everyone is well aware of the cash flow crisis that operators in the tourism, events and F&B sectors are facing with the collapse in demand and issues to supply chain disruptions. That, under this Bill, it is now an offence to terminate a lease, repossess premises and/or start insolvency proceedings against a tenant service to create a buffer period, allowing them hope of a platform from which to rebuild their business when life returns to normalcy.

The other objective of the Bill is the reciprocal corresponding assurance that contractual obligations are still enforceable, that its rights are not extinguished, just temporarily placed on hold. If I may I humbly suggest there should also be discussions on the expected payment schedule after the period of suspension, since it will be unlikely, for example, that a tenant will be able to pay six months of suspended rental immediately. This is essential as this gives reassurance to the parties to whom payment is due, that there is a recourse for recovery of due fees in the future while not placing the pay in yet another difficult position.

With this assurance, I hope parties are able to come to agreement in a cordial and amicable manner with the passage of this Bill. Once again, in light of the current situation, we are stronger if we seek to find solutions together. In the event of future dispute after the Bill ceases effect, I would like to reiterate the points which is measured earlier in February in response to the reading of the Singapore convention on Mediation Bill.

Mediation should be an avenue considered by all parties to resolve any arising disputes. With mediation, the options for settlement are wider in scope than the monetary compensation available through arbitration or litigation, and parties have a chance to negotiate settlement options without prejudice to their legal rights and in a non-pressure cooker atmosphere. Let us work together to ensure business continuity amist these uncertain times.

This Bill also provide for alternative meeting arrangements to be recognised legally, to be compliant with the safe distancing regulations that came into force on 27 March 2020. New regulations to put greater distance between co-workers to minimise the spread of COVID-19 have spurred more businesses to adopt a whole suite of digital solutions from video conferencing, workflow management to online ordering and inventory management.

Now that the Supplementary Budget 2020 has provided for expanded pre-approved digital solutions to the digital project management system and other grants to support businesses in the required adoptions in response to COVID-19, I call on businesses to please explore the programmes available and I am sure the implementation of these solutions will prove to provide long-term value for companies rather than just short-term solutions.

Mr Deputy Speaker, Sir, while my speech has lauded and supported the intent of the spirit of this Bill, please allow me some time in closing to raise a few concerns. These concerns pertain more to the operational aspect of the Bill rather than the provisions of the Bill itself. In the first instance, with nearly 200,000 SMEs in Singapore, the volume of contracts signed is indeed voluminous.

While not all contracts are expected to be in dispute, it is imperative that the Ministry carefully put in place measures to select and appoint the right Assessors given that there is no appeal mechanism provided for. Such Assessors must also be careful to understand and avoid conflicts of interests and buyers whether perceived, potential or actual. Such Assessors should also have been placed teleconferencing capabilities to avoid any face-to-face interactions with those raising disputes. Finally, can the Ministry clarify such Assessors will be covered by some form of Indemnity insurance?

Mr Deputy Speaker, Sir, notwithstanding the concerns that have been raised above, I would like to state that this whole-of-Government effort to address the wide-ranging effects of our economic crisis is herculean and it is deeply appreciated by business owners and investors in Singapore. Once again, Mr Deputy Speaker, Sir, I rise in support of this Bill.

Debate resumed.

Mr Deputy Speaker: Mr Patrick Tay.

6.52 pm

Mr Patrick Tay Teck Guan (West Coast): Mr Speaker, Sir, I rise in support of this Bill. The COVID-19 pandemic has caused unprecedented disruption to all aspects of our lives and debilitated the economy. Many businesses are struggling to cope with the on-going impact to their sales and operations, and many workers are struggling with income loss or even job loss. I would like to commend the Government and the team of luminaries for its swift response in drafting the COVID-19 (Temporary Measures) Bill, a multi-Ministry effort that offers relief for businesses and provides alternatives for companies, trade unions, societies and other bodies relating to the conduct of meetings.

I wish to speak on two specific aspects of the Bill. First, relief for parties who are unable to perform their contractual obligations; and two, alternative measures for the holding of meetings.

First, I would like to speak on the proposed measures relating to the performance of contractual obligations. Many businesses are badly affected by the pandemic and have difficulty meeting their contractual obligations. I welcome the proposals to provide temporary relief from legal action for a party to a contract who is unable to perform its contractual obligations because of the pandemic. However, I note that this relief is limited to certain specified contracts only.

I have received feedback from one type of business which has not been covered under the Bill – security agencies which provide security services at various buildings in Singapore. Such contracts typically require the agency to pay liquidated damages if it fails to meet various obligations under the contract, such as ensuring that a specified number of security officers are present at the work site each day.

Some agencies are unable to fulfil these requirements as their security officers are under quarantine orders or on leave of absence or are unable to come into Singapore as they are Malaysians. I understand that there are cases of service buyers who insist on enforcing their contractual rights by claiming liquidated damages from the security agencies. This imposes a heavy burden on these agencies, which are caught in a bind due to circumstances which are entirely beyond their control.

Furthermore, with the closure of most workplaces now, these agencies will most likely face the termination of a number of existing contracts, which will have a further adverse impact on their business and survivability.

Security agencies perform a very important service in ensuring safety for the public. I urge the Minister to extend protection and relief under the Bill to security agencies, so that they have a respite from legal action by service buyers during this difficult period.

Having said this, I would like to sound a cautionary note. The proposed measures to provide relief under the Bill are fairly extensive and generous. I believe all Singaporeans will recognise that they are a sincere attempt to ameliorate the tremendous pressures businesses face at this time. However, we must also be careful to ensure that they do not go too far, such that while one group is accorded relief, another group becomes adversely affected, or that the measures become subject to abuse. In this respect, I am heartened to note that these measures are temporary and will be in place for only six months at the first instance.

Second, I wish to speak on the proposals relating to alternative methods to convene, hold or conduct meetings as required under any written law or legal instrument. Trade unions registered in Singapore are required by their constitutions to conduct various types of meetings or conferences at specified times. For example, many unions which are affiliated to the National Trades Union Congress, of which I am an Assistant Secretary-General, are required to hold a Delegates' Conference, which includes election of the union's Executive Committee, every four years.

Prior to that, the unions may have to hold General Meetings at each of their branches, where branch leaders are elected. In addition, their constitutions require them to obtain the sanction of their delegates or members for large items of expenditure or to make changes to their constitution.

NTUC has been receiving queries from several of our affiliated unions which are required to hold their Delegates' Conferences or members' meetings this year, and find that it may be difficult, if not impossible, to do so within the time frame mandated by their constitution. I therefore welcome the proposal to allow the Minister to prescribe by Order alternative arrangements for the meeting.

The Bill sets out some examples of possible alternative arrangements which may be prescribed. Some of these are more relevant to entities such as companies or trusts. Where unions are concerned, some of these alternatives may not be workable. For example, in the case of matters which need to be decided by a secret ballot, it would not be feasible to allow voting to be done by electronic means at a meeting, as the unions may or may not have systems which provide the levels of security and confidentiality which the Registrar of Trade Unions may mandated.

I would therefore like to propose that where unions are concerned, the Minister could provide by Order that the Registrar of Trade Unions, as the regulatory authority, may come up with guidelines relating to alternative arrangements which unions may adopt.

In the same vein, besides Unions, there are associations, charities, co-operatives, religious organisations and clans which also have in their respective Constitutions and specified Regulations, process provisions to comply with – in the conduct of AGMs, voting and other meetings for approval of expenditure, leadership change as well as day-to-day operations. A clearer articulation or a set of guidelines for the respective organisations to follow or make reference in these unusual times is welcomed.

To sum up, the extraordinary nature of this Bill amidst these extraordinary times call for extraordinary understanding and appreciation by parties, litigants, the legal and judicial system. With that, I support this Bill.

Mr Deputy Speaker: Senior Minister of State Edwin Tong.

6.58 pm

Mr Edwin Tong Chun Fai: Thank you, Mr Deputy Speaker. I will just respond to two points. The first was raised by Mr Louis Ng, the point about whether the Courts have oversight of why a party may choose not to consent. Let me just explain the framework.

Under clause 28, it is an enabling provision. So, the current position under the Evidence Act is that in all non-criminal proceedings, the Court may permit any witness to give evidence by video or television link in remote proceedings. No consent of the parties will be needed in such a situation. This is for all types of witnesses, whether expert or factual.

But in criminal proceedings, the current position is that all witnesses must be present in Singapore and the current position is therefore narrower. What the Bill does, is to try to expand this slightly given the current situation by allowing overseas witnesses to appear by remote proceedings if the parties consent. And the reason for this is because, in criminal proceedings, life and liberty is at stake and we want to ensure that the overriding consideration is fairness to the parties. To the extent that there might be some prejudice to the accused person and the accused person does not consent, then in such a situation the Courts are unable to force the appearance of the witness by remote proceedings, and I hope that explains the situation.

Mr Patrick Tay asked about unions and the way in which unions might conduct their meetings. I believe I talked about this in my speech earlier as well as about the other types of different meetings that might take place. No doubt, these particular considerations that might apply to one type of meetings or another will be taken into account when the Minister prescribes the alternative arrangements.

Mr Deputy Speaker: Minister Lawrence Wong.

7.00 pm

Mr Lawrence Wong: Mr Deputy Speaker, I thank the Members who had spoken and given their suggestions on the specific provisions of the Bill concerning the remission of property tax. There were some points raised so let me provide quick clarifications.

First, whether property owners who had acted quickly to pass on the property tax rebate before this Bill was introduced will be unduly penalised. I think it is very commendable that some property owners had indeed done so and I would like to assure everyone that these property owners will not be penalised for their earlier efforts. If these property owners had already passed on the rebate to each of their tenants in the form of monetary payment, rental reductions or an offset against current and future rental, consistent with the requirements in this Bill, the amount of rebate passed on earlier will satisfy the obligation imposed under this Bill.

The second issue, the amount and the timeliness of property tax rebate passed on to the property owner's tenant. The property owners will be required to pass on the benefits they received at two milestones, namely by July 2020 and December 2020. This is because property owners on instalment payment plans for their property tax will only receive the full benefit of the rebate by the end of the year. These two milestones therefore strike a balance between ensuring that property owners will not be required to pass on more than the rebate that they have received on hand and ensuring that they pass on the rebate in a timely manner to their tenants.

Third, whether master tenants are required to pass on the property tax rebate to their sub-tenants. While we are cognisant that sub-tenants, namely the tenants of the property owners' tenants, are also impacted by the COVID-19 outbreak, the obligation under this Bill is on the property owner to only pass on the rebate to his own tenants. It does not extend to requiring the property owner to pass the rebate to the sub-tenants or to require that the property owner ensures his own tenant passes the rebate to the latter's sub-tenant. There are two reasons for this.

First, we are very mindful that there is a whole range of commercial arrangements between tenants and sub-tenants. It is not always a straightforward landlord and tenant relationship. They have profit-sharing, they have partnership arrangements. So these can be quite complex.

Second, there is no contractual between the property owner and the sub-tenant. So it would be rather onerous to oblige the property owner to reach out all the way to the sub-tenants.

Nevertheless, we strongly urge and encourage all master tenants to pass on the savings from the rebate to their sub-tenants and to share the burden during this time of uncertainty and difficulty.

Fourth, on the maximum fine of $5,000 and whether or not that is sufficient as a deterrent against non-compliant property owners. Again, let me provide some context. First, the fine of $5,000 takes reference from the Property Tax Act, which sets a penalty for general offences at a fine of the same amount. Second, remember that property tax is paid on a per account basis. So, a retail mall, for example, would have multiple property tax accounts to pay and if they were to not comply with multiple property tax accounts, then the fine of $5,000 will be compounded up to $5,000 per account.

I should remind everyone that the fine does not absolve a property owner of his obligation to pass on the property tax rebate to his tenants under the Bill. The property owner must still pass on the rebate fully in the prescribed manner and by the prescribed timelines. Tenants can bring civil action against a property owner to enforce the obligation to pass down the property tax rebate.

On documentation required of property owners, property owners should ensure that they keep sufficient documentation to show clearly when the rebate was passed on and how much was passed on to their tenants. In the case where the property owner lets out a property to multiple tenants, then the owner should also keep documentation showing how he derived the amount of rebate to be passed on to each of his tenants. Property owners can retain the relevant documentation in either soft copy or hard copy form so long as they remain available over a period of three years.

We also strongly encourage property owners to ensure that their tenants acknowledge the property tax rebate received. This is to minimise potential disputes between the owner and the tenants on whether the rebate has been properly passed on.

Mr Deputy Speaker, I believe I have addressed all the comments from Members and I thank them for their support.

Mr Deputy Speaker: Minister for Law.

7.06 pm

Mr K Shanmugam: Thank you, Mr Deputy Speaker. I thank the Members who spoke. I tried to note down as many of the questions as I could. If I have missed out on any of them, it is not intentional.

Mr Zainal Sapari and Mr Patrick Tay asked if we could extend the protection that this Bill offers, to cleaning firms, security firms and others. The general point I want to make is that this COVID-19 Bill is not intended to be a general intervention to all contracts. At the same time, Members would have noted it gives me the power to add further categories of obligations and contracts beyond the five that are specified.

Both Mr Zainal and Mr Tay are Labour Movement Members of Parliament. I suggest that NTUC study these two contracts that they have specifically talked about, whether they think that a case can be made out – that COVID-19 has particularly affected these contracts and some relief ought to be given, because performance has been affected by COVID-19 in an unexpected way and it is unfair to expect performance. If they can make a persuasive case, we will be prepared to add those categories, but always bearing in mind that this is not simply a case of – there is some problem and therefore we need to help people in their contracts. It has got to go beyond that and be a matter of principle. There should be unfairness in enforcing the contracts and we must find a fair way in resolving the issues.

Subject to that, my Second Reading opening speech made it very clear that we have a duty to help the people who have been affected by COVID-19. We should not ask people, we should not require people to be held very strictly to the contracts if they have been affected by this massive event. So, we will take a sympathetic approach.

Mr Murali Pillai asked about trading contracts. I think I can give the same answer, and the Member can take it up with us. But I want to tell him this. I think we need to be careful about trading contracts. There are many wide varieties of trading contracts. Some of them are international in nature and we ought to be careful about imposing our legal obligations on international parties, because that can also have a disproportionate impact on Singapore as a commercial hub. So, we need to be careful about that.

If we are talking about trading contracts within Singapore, Mr Murali Pillai is a lawyer. If it is a question of say, delivery of certain supply, and that supply is no longer available or supply has been affected by logistics, the contracts usually provide for relief in themselves. The law also provides for relief. But if Mr Murali Pillai believes that over and above that, we can identify a class of contracts that can be circumscribed and be subject to relief, we will be happy to consider them.

There was a question about hire-purchase agreements. If the item is for business, as I said in my speech, that will be protected.

Mr Murali Pillai also asked about international arbitrations or arbitrations which are not local, and can there be a moratorium? We carefully considered this. We have been promoting Singapore as a cross-jurisdictional, international arbitration centre. Two parties who are unconnected to Singapore often come to Singapore to arbitrate and I really do not think it is our business then to be saying automatically that there should be a moratorium.

If a French man and a Chinese party have dealings with each other, and they have chosen Singapore because of its neutrality, and the law that applies is, let us say, a foreign law. Simply because they have chosen to come to Singapore, we should not impact on their arbitration. We should leave it to them to decide. If they have chosen Singapore law, then COVID-19 will become part of Singapore law if Parliament passes it. So, we thought about this quite carefully.

Mr Christopher de Souza asked, what about actions taken before this legislation comes into force? For example, deposits which may have been forfeited. Now, the Bill covers deposits which may have been forfeited. So, as I said earlier, that has got to unwound. Other than that, if other actions have been taken, if properties have been possessed, it is difficult for us to go back and unwind retroactively. But pending legal actions must be stayed if the categories of contracts are covered by the Bill.

Mr Saktiandi Supaat asked about the scope of contracts that are covered. He asked about wedding couples who want to cancel their bookings. It covers hotel bookings, it covers all goods and services relating to the event, and for those who have already cancelled, if the deposit has been forfeited, as I explained earlier, relief is available. And I have explained what sort of relief is possible.

I have also pointed out the need to balance between recovering the deposit immediately and the ability of the other party to pay, because everyone is suffering from COVID-19. It does not mean that the event planner or the other contractual party who has taken the deposit can immediately pay back the deposit to everybody who is demanding immediate payment. So, there needs to be some justice, which is why we have gone via the route of Assessors to look at individual facts and decide.

Mr Saktiandi Supaat, Mr Lim Biow Chuan and Mr Liang Eng Hwa asked about remedies. I spoke about it in my earlier speech. One possibility, which I think is the fairest, is that as a rule, if you have booked an event or a certain venue, if now you cannot hold it because of COVID-19, the fairest is to postpone, if that is possible. And then, the event or the event planner or the hotel does not lose out. They still have the contract. You do not lose out because your deposit is not lost. Both sides find a reasonable accommodation. If that is, for one reason or another, not possible or not suitable, if the contract has to be cancelled, then the question is how much to refund and what is a fair amount to be given back, and those are matters for the Assessors.

And I made the point earlier. Just because you do not want to proceed with the event does not mean that you must get back 100%. If the event companies have spent some money, if they have done some work and so on, they need to be compensated for that.

Mr Lim Biow Chuan asked about whether contracts for tours with travel agencies and air tickets will be covered. The contract for tours with travel agencies will be covered. There should be no forfeiture of deposits. Tours can be postponed. Otherwise, alternate arrangements can be directed by the Assessors. Contracts for air tickets are not covered. Airlines have their own re-booking, refund and cancellation policies that are broadly similar internationally, and we should not intervene in those. Many airlines are currently sorting out those issues with their passengers as well as travel agents.

Mr Saktiandi asked about events that are slated for the later part of the year and whether the Bill could offer protection for such contracts. The answer is – his guess is as good as mine. It depends on how long this situation lasts and how long the Bill is valid for; in the first place, as I have said, it will last for six months. We will see. I am unable to say beyond that.

Mr Liang Eng Hwa expressed concern that the reliefs would trigger counter-claims because service providers could charge an upfront fee or price a risk of non-forfeiture in the fees charged. The Bill does not cover contracts entered into on or after 25 March 2020. So, these points would not apply to this Bill. Because the parties are contracting with full knowledge – willing buyer, willing seller.

Mr Murali Pillai asked whether relief under the Bill could apply on a mutual basis, for example, if a hotel was unable to proceed with the event because its workers are on Stay-at-Home Notice, and he asked why big companies ought to be covered.

Sir, the principle is one of fairness, justice and equity. On the whole, the Bill helps the weaker party. But that does not mean always that the bigger party is at fault. For example, if the hotel is unable to proceed because of COVID-19, is that the hotel's fault, and should we try and find some other alternate arrangement?

The relief under clause 5 of the Bill would apply to either contracting party which is unable to fulfill obligations and revise them in a way that seeks to be fair to both parties. For any party to obtain relief, whether big or small, it would have to show that it was unable to perform the obligation and comply, meet the other requirements in the legislation. If the hotel's workers are subject to Stay-at-Home Notices and it can show that it has got no other resources and cannot get any other workers, and if it complies with and fulfills the other conditions in the Bill, it will be covered.

Mr Lim Biow Chuan, Ms Jessica Tan, Mr Murali Pillai and Mr Chong Kee Hiong all spoke about landlords, especially the smaller landlords who may require rent proceeds to service other obligations, such as mortgage payments. Mr Saktiandi also spoke about landlords who are REITs, and Mr Chong Kee Hiong as well, and the eventual impact that non-payment of rent would have on retail investors.

Sir, on REITs and landlords, I have spoken in extenso earlier. The Bill does not alter the payment obligations of the tenants to the landlords. The landlords can show the Assessors that the tenant, in fact, has the financial capacity to pay a part, if not all, of the rent. If the Assessor finds that the tenant is able to pay all or part of the rent, he may determine that the tenant pays that part or in full either immediately or after the expiry of a prescribed period.

Now, how do we balance the interests of the landlords and the tenants? Mr Chong Kee Hiong pointed out that the rate of return will be affected. I spoke at some length about rates of return. I think, at this point, the real question is not the rates of return but how do we protect the parties. Even if we do not have this Bill, the rates of return are going to be impacted. How many tenants are going to be able to pay? How many tenants are not going to be able to pay? And when a tenant is not able to pay, you put him into bankruptcy, you put him into liquidation, are there a queue of tenants waiting to come in? Is it not going to affect the bottom line anyway?

So, those are the realities of the current situation and the landlords are being helped in a significant number of ways. As I have said earlier, they are going to get 75% of their employee wage cost paid for in April. They are going to get Jobs Support Scheme (JSS) paid for their employees following that. They are going to get the whole series of other benefits.

MAS has also worked with the financial institutions to provide for credit flow. Other issues that they may have in terms of people not paying rent and having a knock-on effect on their credit position, these are issues that I am sure MAS will be able to talk to them about and then talk to the banks about. We cannot prevent banks from exercising their rights, but I think, overall in Singapore, everyone can take a sensible approach.

Essentially, the relief is provided for tenants who are not going to be able to pay anyway. So, all these consequences that one sets out – oh, you know, this is going to impact on the rate of return, it is going to impact on the cash flow of the landlords and so on – but we are dealing with tenants who are not going to pay you, who are not able to pay you.

Second, you already have security deposits for a few months. So, your cash flow would not be affected for a few months. And I have indicated the Assessors will be given guidance that, in the first place, in general, they will say for three months, the tenant can suspend payment, if the tenant seeks. Not all tenants will seek. If the tenant seeks that permission, they will be given that for three months and then the Assessor can look at it. The Assessor can give a longer period or shorter period but the general guidance will be three months.

The entire system is under threat. It is not business as usual. Mr Chong Kee Hiong also made a good point about – and others, too – you know, supposing they get a six-month rental holiday, even if we set off two, three months, there will be some months of rental accrued and, at the end of that period, it will be a substantial amount. Can they pay up?

Well, Mr Louis Ng had a suggestion for that. He asked why do we not be like the Germans? Give an additional two years for them to pay. I do not think the landlords would want that. At the same time, would it mean because some will not be able to pay, therefore, we should not even give them relief now? That would effectively be an argument to say we should not intervene; we should let whoever is going to go bust, go bust, and that would inflict a lot of damage.

The proposal we have, there is no perfect solution simply because the situation is very economically dire. There is pain. There is no complete solution. It is a question of how do you share out that pain? If we have a perfect solution where everyone can walk away with their contractual rights, of course, we would do that. But that is not the real world.

So, do we say some tenants will not be able to pay at the end of six months and, therefore, we should do nothing now? And, therefore, let a lot of other businesses which can pay go bust? What will the REITs and the landlords be left with in such a situation eventually?

So, I would say to the bigger players, look, you are getting the benefits from the Government packages. Play your part and help share some of the pain, too. It cannot simply be that you get all the benefits on one side and, on the other side, you only look at it in terms of your contractual rights.

This Bill is one part of, as I have said, the three aspects, the packages put up by the Deputy Prime Minister, the initiatives by MAS. But I understand the points that Mr Chong makes and some of the others make, and I know that some of it is with a genuine concern for tenants. So, really, we are on the same side seeing how we can help the tenants. And is that best done by extending the payment period by two years and giving them a longer period to pay? I want to be careful about it. At this stage, we are focusing on immediate cash flow relief by suspending for a period of six months, or rather, the Bill is for six months; relief is for a period of months, as determined by the Assessor.

Mr Louis Ng had a couple of points which would have meant substantive intervention or substantive alteration of the rights. One is to extend the period for payment. The other is even more radical – why do we not automatically reduce the rental? I want to be very careful about it because, as Mr Chong Kee Hiong and others have pointed out, there are also landlords who are small businesses themselves. They may have one small building with some tenants. And if you tell them that the rent is going to be reduced automatically by a certain percentage, will they survive and is it fair to them? These are all issues that require much more careful deliberation by Ministries, beyond MinLaw. It requires an economic analysis; it requires an assessment of how the situation plays out over the next few months.

Meanwhile, if the Bill passes, we apply a tourniquet, we hold the ring, we give people time. It also gives the time for the Government to assess the situation as it proceeds, do a deeper economic analysis to see whether any other interventions are justified. We have got to be very careful talking about these interventions. If we say we are studying intervening in order to reduce the payments that tenants make, then you can be sure a lot of tenants, even those who can pay, will not pay. They will say "Let us wait for what the Government is coming up with".

If we say we are not going to deal with this, then a lot of landlords, who might have been willing to accommodate a better arrangement with their tenants, will say "Well, since the Government is not going to come in and do anything, therefore, we do not need to come in and help". So, I think Ministers standing at this box need to be very careful in answering these questions. Let us focus on this Bill. This is a suspension. You can be sure that the economic agencies are actively looking at the situation and looking to see how best to handle it as we go forward, and they will take into account all the feedback that has been given.

Mr de Souza asked whether the Assessor can determine that the security deposit may be used to offset rental arrears. The answer is a clear yes. It does not even need to go to the Assessor. We have already said there is nothing to prevent set-off by the landlord against the security deposit.

It is not in every case that the Assessor will have to even decide, review after two to three months. It will depend on the circumstances and, really, if the parties can work it out themselves more sensibly, then it does not even have to go to the Assessor.

If the landlord can show that, yes, there is a queue of tenants waiting to come in and it is unfair to the landlord to allow a particular tenant to carry on without paying rental, that is something the Assessors will take into account.

Mr Lim Biow Chuan asked a related point whether putting in this Bill will give struggling tenants a false sense of hope that they may not need to pay. I expect that tenants, our commercial people, are quite savvy. I am quite sure they will try and understand what the obligations are. But in any event, MinLaw will put it out in very simple terms as much as possible and push it out. I think even if the tenant is under such a misconception, I am sure the landlord will correct those misconceptions pretty soon.

Mr Liang Eng Hwa asked if the landlord will be prohibited from imposing interest on late penalty fees for rent. He also spoke about this with respect to bank loans. These are outside the scope of this Bill but Members will know that the MAS initiatives cover quite some aspects of what he has mentioned.

Ms Joan Pereira asked if the Government will be putting in place further mechanisms to monitor the situation of smaller businesses. Mr Liang Eng Hwa also called for economic agencies to help companies cope with their payment obligations. Mr Saktiandi asked whether the inability of businesses to fulfill contractual obligations would count against their credit ratings. These questions all raised broader policy questions beyond the ambit of this Bill. I can tell Members that the economic agencies are monitoring the economy very closely.

Ms Jessica Tan spoke about construction contracts, how delay in construction contracts will impact individuals or businesses for whom the works have been committed. Mr Lim Biow Chuan also said that he has residents who cannot shift out of their tenanted residential homes because the contractors are not able to complete renovations due to the circuit breaker.

Well, you can look at the Minister for Health. He has imposed the restrictions and there is nothing any of us can do about it. He has actually made it into a criminal offence if you breach those regulations – Part 7 of this Bill. So, we just have to comply. Now, that impacts on everyone.

It is outside the scope of this Bill except to the extent that anyone wants to claim liquidated damages against the contractor. So, what happens to all these people who are in temporary arrangements? I think everything has got to extend by a certain period. However long the Minister of Health tells you that you cannot move, you are stuck. And that in turn depends on health assessments which obviously must override all other considerations because if we are not careful there can be a substantial spread.

In those situations, the law outside of this Bill provides for certain types of reliefs, Mr Lim knows. If you are not able to perform, if the law requires you to be in a certain situation, there is nothing you can do. You cannot complete on a certain date.

And I am given to understand that during this period, 7 April to 4 May 2020, HDB will also not issue any new renovation permits, but HDB will allow on-going renovation works to be completed if it would take only a few days to complete essential works. Basically, if you can do the work within two or three days, and it can be safe for residents to stay, HDB will allow you to do it.

For those with no other housing options in this situation, HDB will be prepared to allow a few more days to complete minimal essential works to make the place liveable in the interim. And the rest of the works can be carried out later. For those whose flats are undergoing transactions, sale purchase, the buyer and seller will have to discuss new dates. That is essentially it.

There have been some questions on Assessors. Mr Saktiandi, Mr Liang Eng Hwa, Mr Lim Biow Chuan and Mr de Souza had a number of questions on Assessors.

There is no minimum or maximum cap on the value of the claims that may be brought to the Assessors. We will seek to appoint a sufficient number of Assessors to ensure that the process is as quick as possible, as efficient as possible, and my Ministry will also be looking at implementing a quick and simple online process of making an application, sending documents, receiving determinations. Hearings may also be held via video-conference where that is viable.

Mr Liang Eng Hwa suggested giving Assessors powers to direct a process to restructure loans. That will be outside the scope and ambit of this Bill. The Assessors do not have that power and the primary purpose here is to suspend obligations for a period.

Mr Lim asked what is to be done if there is clear prejudice shown by an Assessor. How would MinLaw ensure that the Assessor would always be impartial? The process will have to comply with the rules of natural justice and judicial review remedies will be available, when there is breach of natural justice or corruption, for example. Mr Douglas Foo asked if Assessors would be covered by indemnity insurance. The Assessors will not be acting in their professional capacity. The Bill provides that they will have no liability with respect to anything done in good faith, so there is protection.

Mr Murali asked and sought clarification on the phrase "unable to perform an obligation", in relation to event contracts. It is meant to cover the performance of obligations. The intention is to look at whether a party can perform a contract. In the situation that Mr Murali pointed out, the couple have as much obligation to accept the goods and services as an obligation to pay the price for it. If the contract is to have a wedding banquet of a photography services, but they have become unable to accept the services because of the new measures, they are unable to perform.

Mr Murali also sought clarification on the phrase "inability to a material extent caused by a COVID-19 event." The Bill is intended to cover situations where COVID-19 has meaningfully caused the inability to perform. It need not be the dominant cause but it cannot be a remote, insignificant cause either. It can cover situations where there is more than one reason for the inability to perform the obligation as long as COVID-19 is a material reason.

Mr Murali also sought to clarify whether a contractor who intends to seek relief under clause 6, which prevents the other party from calling on a performance bond, has to serve notice on the other party. The answer is yes. The notification for relief has to be served in order for the contractor to rely on clause 6. If the notification for relief is not served expeditiously, the other party may call on the performance bond. A balance has to be struck between providing relief to the contract and certainty to the beneficiary in the event of default. The paying bank also needs to know whether to honour the payment of the performance bond.

Mr Murali recommended that MinLaw look at digitising wills, should the circuit breaker restrictions extend beyond four weeks. As we explained during the Committee of Supply or COS speech this year, we are reviewing the probate and administration regime and we will consider his suggestions as part of that review.

Mr Saktiandi asked what the Government is doing to ensure that the reliefs given to employers are reaching employees – whether in terms of helping them keep their jobs or upgrading their skills. These are outside the scope of this Bill and they were dealt with by the Deputy Prime Minister yesterday and today.

Ms Jessica Tan said that Assessors will review the moratorium after three months. I should correct this: they may review it depending on what the first order is. It does not preclude giving a longer period or shorter period, but the general position would be three months and then review.

Mr Louis Ng specifically mentioned the case of a lady who had a car hire-purchase and she uses it for purposes of her work. I suppose personal and work. She is in the property field. I can understand. I think it is a fair point. We gave some thought to it when we considered it and we left it out, when you take a hire-purchase vehicle and it is not used purely for business.

We left it out because pretty much everyone who takes or buys a vehicle on hire-purchase may be able to say that they need it for their work. They need it to travel to their workplace or they need it as an essential part of their work. So, that was not the intention of the clause. The clause is, really to say that the vehicle is part of your goods and trade, like a van that is used to ferry people, cars used to ferry people in private hire business. But we will look at what he has said. As I said, it is not a closed category and we can consider whether some refinements are possible in there.

Mr Douglas Foo, I think I have covered his point. Thank you, Mr Deputy Speaker, Sir. I think I have covered the points that at least I wanted to cover.

Mr Deputy Speaker: So, if Members have any supplementary questions, please return to your seat. It will make it easier for me to spot you. Mr Murali, please.

7.38 pm

Mr Murali Pillai: Mr Deputy Speaker, Sir, I thank the hon Minister for giving a comprehensive response to the issues I raised in my speech. I just wish to clarify that I did not raise in my speech the issue about landlords' dilemma. Neither to my recollection, did I raise the issue about trading contracts in my delivered speech so I will let the record speak for itself.

I have a short clarification to ask in relation to the hon Minister's response to the reference to the Arbitration Act in clause 5(3)(b) of the Bill, Minister mentioned that this was looked at very carefully and what he does not want to do is to affect international arbitration. And he mentioned the example of two parties outside Singapore having arbitration in Singapore and I completely understand where he is coming from.

The focus of my question, however, is to deal with situations where the subject matter is dealt with in Singapore. You could have, for example, an international party against a Singapore company. That is also considered an international arbitration under the definition under the IAA so I wonder why in those circumstances, perhaps, the reference to arbitration being seated in Singapore could offer some kind of some kind of practical solution to companies who would also want to seek temporary relief under this Bill.

Mr K Shanmugam: I thank the hon Member. As to my setting out what he might have said in responding to things that he may not have said, I am entirely happy to accept that he may not have said it and I may have mistakenly ascribed to him what someone else has said. My apologies.

On arbitration, I understand the point that Mr Murali makes. I want to be very careful about this. We will study it, but given how much effort we have put into making Singapore an International Arbitration Centre, I want to be very careful about doing anything that potentially affects that perception. We must also look at how many contracts fall in this category that he mentioned – international party and a Singapore party, arbitration in Singapore, coming out of the International Arbitration Act. If it is not that many contracts – my understanding is it may not be that many – then I think we need to analyse it as a balance of benefits and the damage that could be done to our reputation through perception.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr K Shanmugam].

Bill considered in Committee; reported without amendment; read a Third time and passed.