Insurance (Amendment) Bill

Order for Second Reading read.

Mr Deputy Speaker: Second Minister for Finance.

3.51 pm

The Second Minister for Finance (Mr Chee Hong Tat): Mr Deputy Speaker, on behalf of Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Minister-in-charge of the Monetary Authority of Singapore (MAS), I beg to move, "That the Bill be now read a Second time".

Sir, in his Ministerial Statement on Monday, Minister Edwin Tong spoke about the Ministry of Culture, Community and Youth's (MCCY's) concerns on the proposed transaction between Allianz Europe BV or Allianz, and NTUC Enterprise or NE, to enable Allianz to acquire a majority stake in Income Insurance Limited or Income, and the reasons why it would not be in the public interest for the transaction, in its current form, to proceed.

Minister Edwin Tong had explained that when Income proposed the transaction with Allianz, it was to find a strong partner that can complement NE in strengthening Income, so that Income can sustain its social mission. It is important to recognise that NE and Income had acted in good faith and their objective of wanting to go into this deal was to do the right thing, which is to strengthen Income, so that it could do well to continue to do good.

I would also like to reiterate that the Government does not have concerns over Allianz's standing or suitability to acquire a majority stake in Income. The concern is over the terms and structure of this specific transaction, particularly as seen in the context of the preceding corporatisation exercise. The Government remains supportive of NE's and Income's efforts to find a strong partner, with Allianz or other partners, to strengthen Income's capital base and market position.

As Income is now a corporate entity, it is no longer subject to the jurisdiction of the Registrar of Co-operative Societies, or co-ops for short. The deal is still subject to MAS' approval under the Insurance Act for Allianz to become a substantial or controlling shareholder.

However, the Insurance Act does not expressly provide for MAS to consider MCCY's views in applications where the insurer is either a co-op or linked to a co-op. We, therefore, propose to amend the Insurance Act to provide a clear statutory basis for MCCY's views to be considered in any approval involving such applications.

Sir, please allow me to explain the key features of the Bill. Under the Insurance Act, sections 26 and 27 require a person to seek the prior written approval of MAS to obtain effective control or become a substantial shareholder of a licensed insurer incorporated in Singapore.

When assessing an application under section 26 or 27, MAS considers a range of criteria on prudential grounds, such as the financial strength and track record of the applicant, and whether it is fit and proper. This assessment is focused primarily on the suitability of the proposed substantial shareholder or person obtaining effective control.

Given that insurance co-ops are a special category of insurers with a social mission, we are proposing to amend the Insurance Act to provide for the Minister-in-charge of MAS to consider the views of the Minister responsible for the administration of the Co-operative Societies Act (CSA), to withhold approval involving such applications if the Minister-in-charge of MAS considers that it is in the public interest to do so. The Minister-in-charge of MAS will also take into account prudential considerations under the Insurance Act in making his decision.

The Bill applies specifically to a licensed insurer that is the subject of an application under section 26 or 27 of the Insurance Act, where: (a) the licensed insurer is a co-op; (b) the licensed insurer has acquired the principal business or undertaking of a co-op; or (c) a co-op is a substantial shareholder or has effective control of the licensed insurer. The second and third limbs will apply to Income as it took on the assets of Income co-op when the latter corporatised, and NE, as a co-op, is currently Income's majority shareholder.

The Bill will allow the Minister-in-charge of MAS to impose conditions to an approval involving such applications. It also provides that there will be no avenue for appeals to the Minister in respect of MAS' decision not to approve an application on the basis that the Minister has withheld approval.

We are making the amendments on an urgent basis because the proposed transaction is under active consideration by Income's shareholders. Mr Deputy Speaker, I beg to move.

Question proposed.

Mr Deputy Speaker: Mr Liang Eng Hwa.

3.57 pm

Mr Liang Eng Hwa (Bukit Panjang): Mr Deputy Speaker, Sir, let me, first, declare my interest that I work in a financial institution. Sir, in the August Parliament Sitting, I filed a Parliamentary Question on the Income-Allianz deal when I read the public announcement in the newspaper.

Among my concerns then were whether with NE ceding majority control of Income, would Income still be able to do the social good, as what they have done before all these years, which is to provide affordable essential insurance products, particularly to the underserved. I also asked if there is social value in NE retaining control of Income Insurance.

In his reply, Minister of State Alvin Tan shared that the National Trades Union Congress (NTUC) and Income has given assurance to keep the premiums affordable for Income's low-cost schemes for its members and that they reiterated its commitment to its social mission, post-acquisition. Minister of State Alvin Tan also mentioned that Allianz has represented that it would honour Income's existing policies, participate in the national insurance programmes and continue its charity commitments.

In the same session in August, in the replies to related questions on behalf of MAS, Minister Chee Hong Tat also shared with the House then that MAS is still in the midst of assessing the application. He said that MAS would consider a range of criteria in assessing the deal, such as its track record, fitness, reputation, propriety, including the financial capacity of the proposed shareholder to support the insurer when needed.

Sir, when Minister Chee Hong Tat and Minister of State Alvin Tan addressed the House in August on the questions that were raised by Members, I must say that they were both non-committal as to whether the deal would be approved. But I must admit that, in my heart, I thought it is a done deal in due course. So, it came as a surprise to hear the Ministerial Statement by Minister Edwin Tong on Monday that the deal would be blocked on grounds of public interest.

In Monday's Ministerial Statement, a critical piece of information was disclosed where, under the proposed transaction, there would be a substantial capital reduction exercise which would entail a cash transfer of S$1.85 billion from Income to the proposed shareholders within three years upon completion of the transaction.

While such capital reduction exercises are not uncommon in corporate mergers and acquisitions transactions, it would not be acceptable in this context. And the reason is that at the time of corporatisation in 2022, Income enjoyed an exemption from section 88 of the CSA, where they were allowed to carry over the S$2 billion of surplus capital into the corporate entity, rather than transfer it to the Co-operatives Societies Liquidation Account (CSLA) to benefit the wider co-op sector.

MCCY has allowed this exemption then on the basis that Income will continue with its social mission and as a company it would build up its capital resources and enhance its financial strength. So, this capital extraction exercise of S$1.85 billion appears to run counter to the basis in which the Ministerial exemption was granted.

This, to me, is a deal breaker. Clearly, with the cash extraction, the capital position of the new entity would not be accretive and hence, also put into question how the company can continue to fulfil its social mission.

In a way, I am glad that the Government, both MCCY and MAS, through its detailed assessments and due diligence, picked up this serious implication and intervened to halt this proposed transaction. I support this Bill to allow the Minister in-charge of MAS to withhold the approval, based on the advice of MCCY, in which the considerations may be non-prudential in nature. It is the right thing to do.

Mr Deputy Speaker, notwithstanding my support, I have two related asks from the Government.

Firstly, I urge the Government to continue preserving our current social-economic landscape, where social enterprises including NTUC co-operatives operate alongside businesses in a competitive yet socially inclusive business environment.

Social co-operatives and the not-for-profit enterprises play an indispensable role to help keep essential products and services affordable and accessible; and also, importantly, plug the gaps for those areas not covered by commercial enterprises.

In Singapore's context, entities that are run as social co-operatives, such as those like NTUC, have always been a useful instrument for the Government to do some of the public good, such as helping to stabilise inflation, to manage cost of living, to provide more affordable, inclusive products, whether it is healthcare, eldercare, childcare, groceries or insurance. I remembered during the early days of COVID-19, NTUC Fairprice and its pharmacy arm, Unity, were at the forefront of managing the distribution of masks and sanitisers and also helping to keep prices steady and to curb profiteering. Social co-operatives do help to strengthen our social and economic resilience.

In the case of corporatised insurance, where it enjoys the exemption of section 88 of the CSA, I would argue that the Government should requires NE to remain as the majority shareholder of Income for a prescribed number of years so that it can continue to steward Income to carry out its social mission. They may have made undertakings, but it is important to have the majority control. Both form and substance are both important.

I also hope that the Government and the NTUC can align and reaffirm its social missions of with regard to co-operatives and refresh an updated roadmap on the roles of our major social co-operatives in our economy and our society.

Sir, to my next point. Singapore has always been an attractive destination for foreign direct investments. Inward investments have helped to build our economic capabilities, brings in the needed capital to fuel growth, create good paying jobs. Our openness to foreign investments is one of our key success factors for our economic progress and it brings in exciting opportunities for Singaporeans.

Hence, my other concerns would be whether the rejection of the Allianz transaction on grounds of public interest would have any impact on our reputation as a global centre that welcome international investments, which is my second ask. That is, to call on the Government to reaffirm this long-standing policy, to position Singapore as an investment friendly global hub that welcome value adding economic investments.

The point is, we have never been averse to foreign investors acquiring Singapore companies. Over the years, we seen foreign acquisition of local companies, including iconic ones that today, still continues to be foreign owned like NOL, Raffles Hotel, our three large generation companies, SPC, CPG, among others.

It is inconceivable for Singapore as a global business hub to prevent or resist any change of ownerships of companies as these are all part and parcel of the market realisation and maximisation of enterprise value.

I am glad that the Government handled this matter in an open and transparent manner, with the Ministerial Statement on Monday to explain the Government's position and considerations and thereafter tabled this amendment to the Insurance Act so that we can have this debate.

Mr Speaker, since our Independence, Singapore has always pursued pragmatic pathways in our nation building journey. We want to be an appealing global economic hub where as far as possible free market principles prevails. We will leave it to the invisible hand of the market to sort things out, but we are also fully cognisant that there may be pitfalls and areas where unfettered free market may not always serve us well.

And that is why we do see, from time to time, the Government’s visible hands in action, to rectify a situation or to plug a service gap when necessary. This is the uniqueness of the Singapore model, what we call "same-same but different". We want to be a vibrant economy but we want to have the social safeguard. This is to borrow the words of Mr Lim Swee Say, the former Secretary-General of NTUC.

Sir, social co-operatives can play an instrumental role in how we build a functioning and robust social compact, helping to give Singaporeans the needed assurances in this uncertain and volatile world, even as Singapore move forward to embrace the exciting opportunities ahead. Sir, with that, I support the Bill.

Mr Deputy Speaker: Assoc Prof Jamus Lim.

4.07 pm

Assoc Prof Jamus Jerome Lim (Sengkang): Mr Deputy Speaker, in light of the emerging information on the Allianz-Income deal, the Workers' Party (WP) believes that it is a sound decision to withhold approval, at least in its current form. If the deal is bad for Singapore and its public interest, it should be blocked.

That said, I will make two key arguments. I shall begin by documenting a troubling sequence of events in the run-up to the public announcement on the Allianz-Income deal and its aftermath, involving what appears to be multiple sources of information failures within Government, and between the Government and the public. Next, I will offer some thoughts on guiding principles for how we may wish to proceed.

Let me begin by sketching out what appears to be a puzzling set of events that has been presented to us as an "information gap" between MAS and MCCY. I will explain why this is not merely a mild oversight in informational exchange, but a communication breakdown that may reveal some troubling pathologies with how the Government conveys information within itself and with the public.

First, it will be useful to understand just how much MAS knew about Allianz's capital extraction plan. Minister Edwin Tong explained on Monday that MAS had evaluated the offer on prudential grounds, consistent with its regulatory mandate and on that basis, it saw no reason for concern. But MAS' oversight functions extend beyond prudential regulation. Its mandate includes the supervision of domestic systemically important insurers (DSIIs), of which Income Insurance is one.

Besides capital requirements, which is of course central to macro prudential supervision, a holistic assessment, risk assessment, would also entail the evaluation of, and I quote, from the MAS' own published framework on risk assessments, "qualitative criteria such as brand value and strategic importance".

Did MAS not believe that a capital extraction plan, contrary to Income's historical mission, would not potentially contribute to elevated post-acquisition risk? After all, if there were to be a sudden exit of Income policy-holders resulting from the deal, surely this would give rise to undesirable financial instability. Could such a holistic assessment be completed in the brief period between mid-July and the time of the public announcement?

Second, on Monday, Minister Chee Hong Tat also indicated that MAS was: "not aware of MCCY's considerations when MCCY issued the section 88 exemption, and hence did not link the proposal from Allianz to the exemption that MCCY had provided earlier".

This begs the question of why this link was not made, given how the exemption is in the public records, and surely a S$2 billion surplus would be material to the sort of prudential considerations that MAS concerns itself with in its supervision.

Third, it was revealed on Monday that MAS had belatedly shared information with MCCY only in early August, after many Members of Parliament had raised questions related to the proposed transaction during the 6 August Sitting. Apparently, it was then that MAS recognised that there could be larger considerations beyond just prudential ones and hence, only then did the Government began the process of working together in a whole-of-Government manner.

I wonder if it is only me who finds it troubling that there was no coordinated discussion between the two major relevant regulators, MAS and MCCY, in advance of the proposed deal. Has our civil service become sufficiently siloed in their treatment of what falls under which agency or Ministry's purview that even for transactions of such prominence, no joint working group was convened to ensure sufficient information exchange in advance? Could we be assured that this is a one-off occurrence, or is this a canary in a coal mine that is telling us that we need to look more carefully at how well our Government departments exchange relevant data and information?

Fourth, in September, I had filed a Parliamentary Question asking if MAS had required a commitment from Allianz to provide a capital adequacy injection to grow Income Insurance Limited across its business lines, beyond the S$2.2 billion that Allianz would pay. At the time, I, like many others, were unaware of the proposed capital extraction plan.

Presumably, however, the Government was, but in the terse response received from Deputy Prime Minister Gan Kim Yong, it was only suggested that MAS would "assess Income Insurance's business strategy and capital management plan after Allianz submits its application to obtain effective control and be a substantial shareholder of Income".

No reference was made to the capital extraction plan, yet as shared by the Ministers on Monday, these concerns were already conveyed to MCCY by then. So, why was the same information not shared as a response to my Parliamentary Question? Perhaps more important, why was so much of the debate in the House two months ago and the constant refrain by NE itself so fixated on capital injections when in reality, Income was much more likely to be facing capital extraction?

Taken together, I am left to conclude that on the assumption that the Government was neither wilfully withholding information from one governmental agency to another, nor to a direct question posed by a Member of Parliament, then at the least, there appears to have been multiple breakdowns of communication between different governmental entities in the exchange of pertinent information over the transaction.

What should we expect now? Given the objection to the original deal, it is natural for us to ask what is next. I do not propose to be speculative given how we do not even have the contours of a potential revised deal.

But given how NE and Income Insurance have publicly stated that they will work closely with the relevant stakeholders to decide on next steps and how market motivations that led to the original deal indeed remain, it would not be a stretch to imagine that there will be a revised effort to raise capital for Income. What have we learned from public feedback over this episode?

For starters, it is clear that there is strong public sentiment that values the historical social objectives of Income Insurance. Notwithstanding how Income is already a corporate entity ultimately answerable to its shareholders, the boards of Income Insurance as well as NE do need to be more sensitive to how their stewardship should reflect the concerns of stakeholders as well and to render appropriate consideration to its social mission.

The need to be cognisant of social objectives notwithstanding, the minority shareholders of Income, many of whom are aged and have sought liquidity for years, should be allowed to exit with a fair value for their holdings.

If Allianz's capital injection cannot be obtained with an assurance that it will not excessively dilute Income's brand equity, perhaps we can look to other homegrown sources such as a syndicate of institutional investors or even to our Sovereign Wealth Funds such as Temasek as alternative sources of patient capital.

Furthermore, future transactions of such importance should, right at the outset, involve the establishment of a multi-Ministry task force with representatives from all the relevant bodies to ensure that the sorts of communication breakdowns that occurred this round do not recur. It is not difficult to see how, depending on the sector, not only MAS and MCCY but also the Ministry of Manpower, Ministry of Digital Development and Information and Ministry of Trade and Industry may be involved. Traditionally, such whole-of-Government efforts would be coordinated via the Prime Minister's Office. This may well be called for in future such transactions.

To this end, one is also left to wonder why the Significant Investments Review Act, or SIRA, was not triggered in this case, given Income's status as a DSII. The simplistic answer, of course, is simply that income does not fall within the existing gazetted list of designated entities under SIRA.

Indeed, what does appear on the list all seem to be related in some form or fashion with security and the military-industrial complex.

But given how we have six whole pillars for Total Defence in Singapore, including economic, social and digital, it seems somewhat inconsistent with our own characterisation of defence that systematically important financial institutions such as DBS or digital assets such as Singtel could be sold without similar protections.

Doing so may open the door to determining whether SIRA-style restrictions or other measures are necessary for future transactions of this nature, thereby ensuring that future transactions are evaluated not purely on a commercial basis but also for their broad alignment with Singapore's interests.

This will lend further credence to the transparency and predictability of our regulatory approach and will go some way toward restoring our nation's reputation as a reliable institutional partner. In the long run, this will benefit both local and foreign stakeholders in our financial sector.

Sir, the Bill is a good faith effort at redressing some of the problematic issues arising from the first pass of the Allianz-Income deal. If this were the reason alone, the WP would have no objection to the Bill, beyond clarifications to the points that I have raised. That said, the Bill does raise other legal and procedural considerations which I will leave my Sengkang colleague, He Ting Ru, to elaborate.

Mr Deputy Speaker: Ms Joan Pereira.

4.18 pm

Ms Joan Pereira (Tanjong Pagar): Mr Deputy Speaker, Sir, I rise in support of this Bill, in view of the information shared with the House on Monday. The Income-Allianz deal is one which has drawn a high level of public interest. The majority of Singaporean households have insurance policies with NTUC Income or Income Insurance.

Due to the nature and the valuation of this deal, one would expect close coordination among the relevant authorities, such as MCCY and MAS, at all stages during the process of evaluation. I hope that the whole-of-Government way of doing things will continue to be a mainstay and strength of the Singapore Civil Service.

I had raised this issue in Parliament two days ago and we had since have more clarity on how the MAS team had been assessing the deal on prudential grounds. I appreciate that MAS shared information, which they assessed to be relevant to MCCY. It is comforting to know that we continue to have good officers in MAS and even the Civil Service, who are alert and can pick out issues beyond their scope. However, could this information not have been shared earlier with the House when the topic was heavily debated in Parliament back in August?

This is a high-profile, cross-border deal. While I fully support the amendments in the interests of the public, would we be setting a precedent where investors need to factor in potentially unexpected changes to regulations?

On one hand, I am heartened that our Government is open to feedback even as it strives to balance different priorities and competing demands. On the other hand, we must uphold Singapore's reputation as an open, transparent and rules-based city which is pro-business and welcomes foreign investments.

I am heartened that the Government has confirmed that it will be open to new proposals if the concerns are addressed.

Finally, my last question. Would there be other businesses, which are organised as co-operatives, institutions of public charter or critical infrastructure operators, such as telecommunications companies, water desalination plants or oil refineries, which may require similar legislative amendments in order to prevent something similar from taking place?

Mr Deputy Speaker: Ms He Ting Ru.

4.21 pm

Ms He Ting Ru (Sengkang): Mr Deputy Speaker, passing legislation which has or is seen to have retrospective effect must not be taken lightly. This is especially so when it adversely affects the rights and interests of persons and has the potential to hurt Singapore's reputation for certainty, stability and predictability of our commercial laws.

It should not be taken lightly and the WP's position when the Constitution was amended a year ago as a precautionary measure, reflects our general concern over retrospective amendments.

In this case, while it is true that MAS’ approval of Allianz's proposed acquisition of 51% of Income remains pending, we note that the transaction had previously been signed and announced, albeit conditional upon receiving regulatory approval amongst others. It can thus be seen to be a live transaction.

Thus, I believe that there is a risk that the amendments proposed in this Bill, along with their urgent nature, would be seen to be retrospective by players in our corporate finance landscape.

For this, I specifically refer to clause 2 of the Bill which contains the proposed section 33A subsection 9 of the Act which states that, quote, this section also applies to a relevant application received by the authority before the commencement of the Insurance (Amendment) Act 2024 that is still pending as of that date.

Even if some were to argue that this Bill's acts do not fall within the realm of having retrospective effect, there is a second principle of legal and regulatory certainty in the context of Singapore's corporate finance landscape to consider. This was also alluded to by Members Liang Eng Hwa and Joan Pereira in their speeches.

Having worked on a number of highly complex multi-billion-dollar mergers and acquisitions, and structured finance transactions across multiple jurisdictions spanning the globe, I know how invaluable it is to have certainty. In such deals, there are many moving parts and a number of complicated regulatory regimes ranging from takeover codes, listing rules, merger control, catch all laws governing natural and national interests, and also financial rules for lawyers and other financial advisors to consider.

It is also why it is also standard practice for parties to engage with regulators early on in the preparatory process long before any public announcements are made so that parties can understand potential impediments to their transactions, assess the risk of a regulator blocking the transaction and to address these through their structuring of the transaction, including on occasion giving irrevocable and legally binding undertakings to do or not do certain things for a fixed time period post-completion.

This is also the case here in Singapore.

It is fair that we ask whether the amendments proposed in this Bill, especially under a Certificate of Urgency, which was last used during COVID-19, are in fact strictly necessary to provide the Government through MAS the legal power to block the Allianz’s acquisition of Income. After all, according to the offering circular, the long stop date was actually nine months after the announcement date, which would actually have taken us until sometime next year.

MAS' powers are contained in sections 26 and 27 of the Insurance Act 1966. These sections provide the MAS may approve an application to obtain effective control or become a substantial shareholder of a licensed insurance company if MAS is satisfied that: first, the applicant is a fit and proper person; and second, that having regard to the likely influence of the person, the licensed insurer concerned will or will continue to conduct its business prudently and comply with the provisions of this Act.

The Act also does not say that MAS cannot take into account other factors relevant to its mission, which would include the overall health of Singapore's financial sector as a whole, for example, including the provision of insurance services to the public, and whether the people's interests in having access to affordable and reliable insurance policies and products are served.

Additionally, I note that although Income is said to have a social mission, it is also clear that its mission is to provide insurance, which is most definitely a financial service. Thus, whether Income in whatever form it morphs into in the future conducts its financial services business in a manner that benefits the people of Singapore on the whole, is something that MAS can already take into account in considering whether to give approval under sections 26 and 27 of the existing Insurance Act.

Therefore, I hope that the Government can address legitimate concerns raised about how this Bill and its passage may be perceived as harmful retrospective legislation and rushed as legislation, with its attendant negative impact on our reputation as a financial and corporate hub with certainty over laws and regulations.

How specifically does the Government hope to address concerns that future parties may have about the risk that their live transactions may suddenly find themselves blocked by urgent retrospective legislation being passed in the middle of a live transaction after an announcement is made in accordance with applicable listing rules and takeover codes and is just pending regulatory approvals?

I would now like to turn to some questions arising from the proposed Allianz-Income transaction which provided impetus for this Bill. Some of the points will be matters that fall within the domain of MCCY, but I believe it is impossible to disentangle MCCY's role in this matter from MAS' role as the approving authority for the transaction. Indeed, the very purpose of the Bill is to enable MAS to consider the view of the MCCY Minister.

First, from the MCCY Minister's Statement, it is evident that one important consideration behind the Government's decision to block the transaction as currently structured, was based on representations that Income made at the time of its corporatisation as to why it should be allowed to keep a substantial surplus of some S$2 billion. Would the Government therefore clarify four points about this?

First, the retention of surplus due to legal form change. Given that Income was not being dissolved but merely changing its legal structure, would this fact alone have been sufficient for MCCY to grant Income's request to keep the surplus?

Second, the justification provided by Income. If the above reason was not sufficient, what specific representations did Income make to MCCY that justified allowing it to retain the surplus? Did Income detail any new business lines or initiatives it planned to pursue, that would require significant capital thereby justifying the need to keep the surplus?

Third, the link between surplus and social mission. Was there an understanding between MCCY and Income that retaining the S$2 billion surplus was tied to Income's commitment to its social mission? If so, could the Government provide more details on this agreement and how the surplus was intended to support that mission?

Fourth, future restrictions on returning surplus to shareholders. Can the Government clarify if its position is that because of the circumstances under which Income was originally allowed to keep the surplus, the company is now restricted indefinitely from returning any part of that surplus to its shareholders?

The philosophical question underlying these four specific questions is, what really is Income's social mission?

During Monday's Ministerial Statement, the MCCY Minister also referred to a lack of assurance that Income would preserve its social mission post completion should Allianz become its majority shareholder. Could the Government elaborate on this and articulate again what it sees as Income's social mission now and going forward into the future? After all, the landscape has changed dramatically since its founding over 50 years ago in 1970.

Specifically, would Income's social mission lie in the areas of life insurance policies, or whether other areas such as health insurance may be more important and the focus of a socially-oriented Income? It is important that this issue be viewed looking at the overall big picture.

We can point to Allianz's offer document, which mentions that it would continue to honour Income's participation in national-level insurance programmes, continuing its charity commitments, providing low-cost schemes to union members, pledging $100 million over 10 years from 2021 to promote social mobility and support the well-being of seniors, are worthy moves to be sure.

However, if we leave the question of what is its social mission unanswered, it risks presenting these specific and perhaps narrow matters as central, while missing the wider picture of how Income is fundamentally able to fulfil its social mission as an insurer.

To conclude, WP supports the Government's blocking of the proposed acquisition in its current form on public interest grounds based on publicly available information, especially given the concerns that my colleagues and I had raised in this Chamber in August.

Therefore, we will not be rejecting the Bill. However, we believe that the downsides to whether this Bill will be seen to be rushed and retrospective legislation-making, and this assault on legal and regulatory certainty that changing legislation in the middle of a major live transaction means that we would need to register our abstention on this Bill.

Mr Deputy Speaker: Ms Jean See.

4.32 pm

Ms See Jinli Jean (Nominated Member): Mr Deputy Speaker, I declare my interest as a Labour Movement representative and a long-standing policy-holder of Income Insurance, a corporate under the governance of holding entity, NE. Like many Singaporeans of a certain vintage, Income is intertwined with memorable chapters of my life – when my parents first took out insurance savings plans for my sibling and me, when I took on travel insurance for my first trip overseas, and later, when I enrolled my parents and myself in Income’s Shield Plans after I started working.

To my fellow unionists and me, Income, together with the social enterprises under NE’s purview, are consistent partners that our unions and associations have counted on to reinforce NTUC’s social mission of helping workers to earn a better living and live a better life. I have assisted members who found their lives suddenly upended by severe injury or illness or in some cases, death. Because Income made members’ well-being its focus, I have counted on its insurances to provide much needed financial relief to members who were hit by these life catastrophes and as important, to communicate our care for our members and their families.

Fast-forward to July this year, Income Insurance announced its decision to form a partnership with global insurer, Allianz, to strengthen its finances and financial sustainability to serve the longer-term needs of its customers. Both Income and its holding entity, NE, have been consistent in communicating Income Insurance's steadfast commitment and responsibility towards delivering social good on a lasting basis while charting a durable path to financial sustainability through the proposed partnership with Allianz.

I note the developments which MAS had surfaced when it evaluated the proposed partnership between Income and Allianz, and that these developments had prompted the Government to recommend expanding the MAS’ diligence process to also include consultation with the Minister overseeing co-operatives.

The Insurance (Amendment) Bill would thus apply an expanded diligence process on applications to the MAS where the licensed insurer in the application falls under one of three categories: it is a co-operative; or it has acquired the principal business of a co-operative; or it has a substantial shareholder or effective controller which is a co-operative.

Specifically, the new section 33A in the Bill would empower the Minister to withhold approval of application from the above categories of licensed insurers on grounds of public interest. Section 33A also empowers the Minister to attach conditions to the approval and allows the Minister to add to, vary or revoke any of these conditions.

In this regard, I would like to seek clarification on three areas outlined under section 33A. First, could the Minister advise what is defined as “in the public interest” for the purposes of section 33A? Second, what type of conditions could the Minister attach to the approval and what are the considerations guiding how these conditions are determined? Third, under what circumstances would the Minister make changes to the conditions and on the same basis, under what circumstances could the licensed insurer apply for a review of the conditions?

Because insurance is most valuable when we are most vulnerable, I can appreciate and understand why the Government is seeking to apply both prudential and social perspectives to its evaluation of the proposed partnership between Income and Allianz.

The uncertainties felt by our unionists brought about by the halting of the deal are also understandable. My fellow unionists and I do understand and appreciate the reasons why the deal cannot proceed in its current form, as articulated by the Minister of MCCY. Income must find new ways to navigate the Bill, alongside existential challenges such as insuring an ageing base and expanding cover to include more complex and varied health conditions. As the saying goes, charity begins at home. It remains a fact that Income must do well in business to be in the position to do social good.

The Bill thus places the ball back in Income’s court, to consider the implications of the Bill in respect of Income's plans to chart a durable path to long-term financial viability.

In summary, the Bill presents an opportunity for Income and Allianz to articulate how the proposed partnership can do well and do good. Doing well translates to safeguarding the best interests of stakeholders, including policy-holders and shareholders, while doing good is about creating an impact footprint that is purposeful, meaningful and lasting in outcomes for workers and the social good. Mr Deputy Speaker, notwithstanding the clarifications sought, I support the Bill.

Mr Deputy Speaker: Ms Hazel Poa.

4.37 pm

Ms Hazel Poa (Non-Constituency Member): Deputy Speaker, Sir, the Progress Singapore Party (PSP) is heartened that the Government has intervened to stop the proposed deal to sell a majority stake in Income Insurance to Allianz. PSP had not been in favour of this deal. In July, Dr Tan Cheng Bock had written on his Facebook page asking for the reasons for breaking a promise. And in a Facebook post after the 6 August Sitting, my colleague, Mr Leong Mun Wai, had expressed his hope that the deal would be restructured.

While we support the decision to stop this deal, we have concerns about the act of amending the Insurance Act in a hurry in order to block it. This approach sets a somewhat unsettling precedent.

Sir, as far as possible, the Government should rely on existing laws when assessing deals for regulatory approval. This provides confidence to investors, here and abroad, that our regulatory framework is stable. Even though the Bill we are debating today is tightly scoped, the fact that we are amending the law today so that a specific pending acquisition application can be blocked may be unsettling to investors.

Under existing law, sections 26 and 27 of the Insurance Act 1966 require the approval of MAS for any application to obtain effective control or become a substantial shareholder of a licensed insurer. Some conditions were listed under which MAS may grant approval. As the words used in sections 26 and 27 is “may approve” and not “shall approve”, it appears to us MAS already has the discretion not to approve the application.

Can the Government clarify why it is necessary to amend the Insurance Act to stop this transaction instead of relying on existing provisions?

On 14 October, during clarification time after the Ministerial Statement on this issue, Members were assured that we would have time for further debate on the sale of Income Insurance during the Second Reading of the Insurance (Amendment) Bill. I shall now proceed to do that.

I had during that session raised the point that communications on the reasons for the sale of Income Insurance to Allianz had been misleading. Minister Edwin Tong disagreed and said there was no misleading.

Let me explain why I felt it had been misleading. In a joint statement from NE and Income Insurance dated 4 August 2024 to explain the need for the sale of Income Insurance, paragraphs 7 and 8 of the executive summary stated that, “In terms of NTUC Enterprise upholding Income Insurance’s social mission, capital resilience is necessary to provide affordable, inclusive insurance on a sustained basis...The circumstances between when Income Insurance was founded and today are vastly different. While the goal of providing affordable insurance remains, the competitive landscape has changed with more than 40 global, regional and local insurers vying for growth in a mature Singapore insurance market. This also makes strong and continuous capital resilience a pre-requisite for growth, which a social enterprise model alone cannot shoulder.”

Does this not create the perception that the sale is necessary due to the need of Income Insurance for more capital? How can we reconcile this statement with the fact that by the time this statement was issued on 4 August, an application had already been made to MAS in July to reduce capital by S$1.85 billion and distribute this amount to the shareholders? Would not this capital reduction reduce capital resilience?

At the Parliamentary Sitting on 6 August 2024, Minister of State Alvin Tan while answering Parliamentary Questions on this deal repeated the need for capital a few times. He said: “NTUC has explained the reasons for the deal with Allianz. Let me briefly reiterate the points that NTUC has made. The current situation for Income cannot be sustained and Income's capital buffers have repeatedly come under pressure.”

In response to Mr Liang Eng Hwa’s supplementary question, he again said: “I think if we take a step back, the reasons why Income has gone into this proposed deal is well laid out. There are realities on the ground – competitive, Government stepping in to provide that social assurance, as well as the capital requirements. The capital buffers, for example, were under pressure. So, that is the first principle.”

In response to Mr Leong Mun Wai’s supplementary question, he said: “Time is the best judge, but let me again put it out very clearly, that number one, Income’s capital buffers have been under pressure. There is no doubt about this.”

He also said: “Then, it also begs the question, could Income and NTUC Enterprise then have looked for other funding sources, which is the question on the ground. They have. In their statements, said that they have. They have looked at financial institutions and non-financial institutions, locally and foreign.”

All these statements contribute to the perception that the need for more capital is the number one reason for the sale of Income Insurance. However, the plan to reduce capital by S$1.85 billion totally contradicts this argument. MAS has assessed that even after this huge capital reduction, it is still meeting capital adequacy requirements.

Does this not show that the public and the Government have been misled? If Minister Edwin Tong still feels that there has been no misleading, I think we will have to agree to disagree and let the public form their own opinion.

If, however, the Government agrees that the communications have been misleading, I hope it will send a message that this is not acceptable by holding those responsible to account.

This episode has thrown up another issue of concern. The ties between NTUC and the PAP Government are very strong. In the past, many Secretary-Generals of NTUC are concurrently Cabinet Ministers. Minister of State Alvin Tan himself said so on 6 August, "many of us here are advisors to NTUC unions, we have worked very closely with them. I work very closely with my unions, Singapore Industrial and Services Employees' Union (SISEU). I work very closely with the co-ops under SNCF. I meet them very regularly."

This close relationship is a double-edged sword. While there are circumstances when this is an advantage, I believe this episode has reminded us to be careful lest the close relationship affect the Government in its regulatory role. Deputy Speaker, Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Deputy Speaker, PSP is relieved that the Government has blocked the acquisition of Income by Allianz. Right from the beginning, PSP has not been in favour of this deal.

However, we also have some reservations about amedning the Bill in a hurry in order to block the deal, because this sets an unsettling precedent. We believe that the Government should, as much as possible, use the existing provisions and laws to assess whether or not a transaction can be approved. Only then can both investors from Singapore and abroad have confidence in the stability of our regulatory framework.

In our view, sections 26 and 27 of the Insurance Act already gives the Monetary Authority of Singapore (MAS) sufficient discretion to reject this deal based on factors beyond financial prudence. Therefore, PSP hopes that the Government can provide a more detailed explanation of the necessairty of this Bill today.

(In English): In closing, PSP agrees with the Government that it would be in the public interest to stop the deal from proceeding in its current form. Therefore, despite our reservations about this urgent Bill, we will support this Bill if it is necessary to stop the deal.

Mr Deputy Speaker: Mr Neil Parekh.

4.47 pm

Mr Neil Parekh Nimil Rajnikant (Nominated Member): Mr Deputy Speaker, Sir, thank you for allowing me to speak on the Insurance (Amendment) Bill.

This Bill is being proposed in light of the Income-Allianz deal which has raised important questions regarding public interest, corporate governance and the preservation of social missions within insurance entities, especially those transitioning from co-operative models.

I would like to commend the efforts of MAS and MCCY for their excellent collaboration. Their joint review of the Income-Allianz transaction, announced on 17 July, revealed concerns that went beyond a typical business deal. It cast doubts on whether Income, after being acquired by Allianz, could fulfil its social mission.

However, it is important to note that this deal is still only proposed. The door remains open for further negotiations, provided that any future proposal addresses the concerns raised by MCCY and MAS.

The events of the last few months have brought to light a few important issues, with the most important one being how we deal with our national treasures such as Income Insurance. In my view, control of such carefully nurtured national treasures should never be passed on to foreigners. The majority of the Board as well as the seat of the Chairman should always be in control of Singaporeans.

While such a strong view coming from someone like me who has spent over 30 years in international finance, where cross-border mergers are commonplace may surprise a few, my view is based on what I believe, that national treasures should be treated as what they are – national treasures – companies that, for generations to come, will provide world-class products and services to Singaporeans.

To be clear, I do not advocate such a Singapore First policy for companies that do not have a social mission to fulfil nor are they considered national treasures. My years in international finance have also taught me that the minor criticism we may face in the short term for a strong Singapore First policy will dissipate away quickly. Nor will such a strong, clear policy discourage foreign capital from buying controlling stakes in our companies that do not have a social mission to fulfil.

Many countries have allowed control of their national treasures to be sold to foreigners now regret it today. Just ask the many citizens and residents of New Zealand, where all the major banks are controlled by foreigners.

As I had mentioned during the debate in January this year on the Significant Investments Review Bill, perhaps the time has come for us to have a comprehensive all sector approach to review all large foreign investments in entities significant to the daily lives of most Singaporeans. Such a comprehensive all sector approach will make sure no important large deal slips through the cracks.

With the unique brand that it has, I fail to understand how Income Insurance does not have a larger market share and greater pricing power in our domestic market. Why has Income’s relevance in the insurance market just decrease over the years? That leads me to agree with the view expressed by many that Income Insurance clearly requires strengthening. But, in my view, such a strengthening exercise does not mean ceding control to foreigners.

Perhaps what is needed is a new Singaporean controlled Board of Directors with real talent, real experience and a real vision to come up with a coherent seven-year business plan to make Income Insurance a world-class company, operating profitably not only in Singapore but also in other countries in Asia, ex-Japan. There are plenty of providers of growth equity capital focused on the insurance business that would be willing to take a minority stake in Income Insurance if a coherent, realistic five-year business plan for growth and development would be presented to them. We have accomplished that in other sectors and I see no reason why we cannot accomplish the same for our insurance business.

This new Board should be given the complete authority as well as full responsibility for recruiting experienced talent from international insurers, who can help develop the right products and services and execute this five- to seven-year business plan that, while protecting Singaporeans first, can also develop a world-class insurance company headquartered in Singapore.

While I have shared my views on what I consider is the best strategy for Income Insurance, I would like to seek clarifications from the Minister on the Bill.

One, what kind of a deal with a new investor would satisfy the Government? Two, what guardrails would be established to ensure that Income will continue to meet its obligations to society? Three, how can we ensure that any future financial partner can contribute to the financial strength of Income while still preserving its social mission? Four, how can we ensure that any new financial investor in Income does not make a quick buck by selling out their stake in a very short period of time or taking a large dividend payment?

In conclusion, I believe the proposed Insurance (Amendment) Bill is a good step towards greater accountability. I also commend the Government, especially the Second Minister of Finance Chee Hong Tat for his strong leadership and moving quickly to bring this Bill for a vote to Parliament. This Bill will allow MAS to facilitate the right discussions while maintaining the highest standards of governance.

While we must remain an attractive and competitive market to attract global capital, we must do everything possible to protect the long-term interests of Singaporeans by continuing to careful nurture national treasures such as Income Insurance. Mr Deputy Speaker, Sir, notwithstanding my clarifications, this Bill has my full support.

Mr Deputy Speaker: Mr Leong Mun Wai.

4.53 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Deputy Speaker, Sir, I will first declare my interest as an independent director of a life insurance company registered and operating in Singapore. As my colleague Ms Hazel Poa has said PSP will support the Bill if it is necessary to block the Allianz-Income deal. For the sake of Singapore and the 1.7 million policy-holders of Income, it is important that we stop this deal in its current form.

After we discussed the deal in this House on 6 August, I expressed my hope that this deal will be restructured so that NE remains as the majority shareholder. I am personally very glad that the Government has listened to the concerns expressed by Mr Tommy Koh, the two former CEOs of Income, Mr Tan Suee Chieh and Mr Tan Kin Lian, and many Income policy-holders, and decided to block the deal. I would like to acknowledge the efforts put in by MCCY and MAS to scrutinise the transaction and come out with this Bill.

However, I am seriously concerned at the process by which we arrived at the conclusion to block the deal. We learned on Monday that MCCY had no prior knowledge of Allianz's offer for Income before it was publicly announced in July. Furthermore, it was only after the 6 August Parliamentary Sitting that MAS shared the terms of the proposed transaction and Income's capital reduction plan with MCCY. But why did MAS wait?

I accept that sometimes, because of market sensitive information, it may not be possible to publicly disclose the full details of a proposed transaction. But in this case, we are talking about information being shared within the Government, between agencies. All the agencies knew that this issue would be debated in August, because they received notice of our Parliamentary Questions. Why is this information that is highly relevant to the proposed transaction being gatekept at different agencies within the Government? Throughout this whole affair, it seems that every gatekeeper is concerned only about the part of the process owned by them and no one is keeping an eye on the overall outcome.

In our system, the buck stops with Cabinet. On a major financial transaction involving a national icon like Income that requires regulatory approval, it is Cabinet that must make a final decision. Why does it seem like there was no coordination within Cabinet on the exchange of important information relevant to the transaction before the August Sitting, so that the Government can take a more informed view and we could have had a more productive discussion in August?

On Monday, Minister Chee Hong Tat said that at the time, MAS was still doing technical assessments and did not surface the details of the transaction to the MAS Board before the 6 August Parliamentary Sitting. But Minister Chee Hong Tat and Minister of State Alvin Tan are both members of the MAS Board and would have been in a position to proactively question MAS officials for the full details of the transaction, which would have included the capital reduction plan before they answered questions in this House on 6 August. Why was this not done?

On 6 August, the officeholders rehashed again and again how Income's capital buffers have come under pressure. Minister of State Alvin Tan also emphasised how Allianz has committed to continue Income's pledge of S$100 million over 10 years from 2021, to provide social mobility among the lower income and support the well-being of seniors. But now we know that Income and Allianz had all along planned to return about S$1.85 billion in cash to its shareholders within the first three years of completing the transaction. So, were all these discussions on Income's social mission and capital buffers on 6 August meaningful?

With the knowledge of the capital extraction, we can see that this deal was essentially an asset-stripping exercise in favour of the shareholders, especially NE and Allianz, with little consideration for the social mission and the interest of the 1.7 million policy-holders. Had the deal gone through, NE would have relinquished control over Income while unlocking hundreds of millions of dollars from the capital reduction exercise.

In my view, this would have been another sad case of Singapore losing control over a key strategic company for cash, instead of maintaining these companies for our economic development and security.

Since the Global Financial Crisis, capital adequacy standards have been increased significantly. In my view a capital reduction exercise should have raised alarm bells in MAS even from a prudential standpoint, especially given that NE has had to put in capital injections of about up to S$630 million over the years. I was ever surprised to hear Minister Chee Hong Tat disclosed on Monday that based on the plans submitted, MAS did not have reason for concern as Income was projected to continue to meet regulatory capital requirements with a healthy margin even with a capital reduction.

While we trust that MAS officers are highly professional and have conducted a thorough review of the deal from a prudential point of view, can the Minister further explain why MAS does not have any further prudential concerns over the capital reduction plan, especially considering NE's history of having to inject capital into Income over the years?

Sir, earlier, my colleague Ms Hazel Poa had provided her view on why she felt the communications of the reasons for the sale of Income to Allianz have been misleading. NE and Income Insurance need to come out to explain why they agreed to a capital reduction plan when both parties had in their joint statements on 4 August 2024 stated explicitly that capital resilience is necessary to provide affordable, inclusive insurance on a sustained basis.

Explanations are also needed from NTUC Secretary-General Ng Chee Meng for the joint statement he made with the President of NTUC on 5 August 2024 which said, "The NTUC Central Committee was briefed, and after full and serious consideration, the NTUC Central Committee decided to support NTUC Enterprise's consideration of the offer from Allianz". They added, "We believe the offer is good for Income, good for its policy holders and will enable us to fulfil our mission from a stronger position".

But now we know that the proposed transaction includes a capital reduction plan and MCCY, I quote, "is not confident that the proposed transaction would not affect the ability of the co-op movement as a whole or of Income itself to carry out its social mission".

So, when the NTUC Central Committee was briefed on the offer, were they briefed on the full details of the transaction, including the capital reduction plan? And if so, did the NTUC leaders believe in good faith that the offer would enable NTUC and Income to fulfil its social mission from a stronger position? And what were the reasons that led them to reach such a different conclusion from MCCY?

If the NTUC Central Committee did not know the full details, then why did NE and Income not brief them on the full details of the transaction? And if NE had agreed so easily to relinquish control of Income to Allianz with so little assurance about the ability of Income to carry out its social mission, it is arguably justifiable for policy-holders to be concerned whether in a future deal there will be safeguards to protect the surpluses in the policy funds accruing to the policy-holders.

Hence, contrary to what the NTUC leaders have represented to Singaporeans, we can say that this transaction is not good for Income, not good for its policy-holders and will not allow Income to continue to fulfil its social mission. The leaders of NTUC, NE and Income owe the public a more substantial explanation to this.

Finally, before the Ministerial Statement on Monday, did MAS and MCCY brief or explain to Allianz and Income that this deal is against our public interest? If yes, I would like to ask what was Allianz's response? Did Allianz offer to withdraw the current deal so that today we do not have to go through this debate?

Sir, we urge the Government to take lessons from this incident. We can do more to improve whole-of-Government coordination when making major decisions that impact areas governed by multiple agencies. The debate over the Income-Allianz deal this week has reminded me of another instance during this term of Government when we had to debate a Bill on the Certificate of Urgency in 2021 to restrict the use of TraceTogether and SafeEntry data to only serious crimes.

In June 2020, Minister Vivian Balakrishnan had assured the public that TraceTogether data will be used only for contact tracing. Then, in January 2021, another agency, the Ministry of Home Affairs revealed something different, that the police could access TraceTogether data under the Criminal Procedural Code. Then as it is now, the public has been left with the impression that our government agencies are siloed and coordination within the Government is poor. Or to put it simply, the left hand does not know what the right hand is doing.

It is the responsibility of Cabinet Ministers to ensure that they are apprised of all relevant and important information and to consider that fully before making decisions and making public pronouncements. We cannot fall into the trap of minding the process and missing out the outcome.

Deputy Speaker, Sir, PSP is raising all these questions with only one objective and that is so that we can ensure that our institutions and processes are always aligned and working well to protect the interests of Singapore and Singaporeans. We almost made a grave mistake here.

Fortunately, there is a silver lining in this whole saga. It has highlighted the important role played by Singaporeans in checking the decisions of our public institutions. In particular, we saw Singaporeans with expertise and social repute speaking out and helping the public understand complex issues. This has helped Parliamentarians, like myself, to voice out more effectively for Singaporeans. We hope that they will continue to do so. Majulah Singapura.

Mr Deputy Speaker: Mr Mark Lee.

5.10 pm

Mr Mark Lee (Nominated Member): Mr Deputy Speaker, Sir, the Bill before us today, while primarily concerning co-operatives, has significant implications for the wider business community. It grants the Minister the authority to withhold approval of transactions involving co-operative-owned insurers where the Minster deems it necessary in the public interest.

While I support the intent behind safeguarding public interest, this raises important questions about the broader regulatory framework we are fostering. We must strike a careful balance between necessary Government intervention and maintaining business transparency, ensuring that regulations do not unintentionally hinder legitimate business activities or innovation.

According to the Ministerial Statement on Monday, the Government has acknowledged that Income complied with regulatory obligations by disclosing their plans fully. This includes the details of a potential future capital optimisation by Allianz submitted by them to MAS and was consequently met with intervention, which has created significant uncertainty.

Businesses are watching closely to see how this Bill and similar regulatory actions will impact their ability to operate. I would like to raise three key areas of concern.

First, transparency forms the foundation of trust between businesses and regulators. If businesses comply with full transparency, yet still face intervention, what incentive is there for them to continue being transparent in future dealings, especially disclosure or future projection, plans that may or may not come to fruition. Will businesses feel secure enough to openly share their plans, especially those involving sensitive or confidential decisions?

Second, the ambiguity of this Bill surrounding the term "public interest". While it is the Government's prerogative to define public interest and ensure the protection of society, it is important to clarify upfront what specifically constitutes public interest in transactions of this nature. Without a clear definition, businesses face uncertainty about what actions may trigger intervention, which introduces commercial risks into the regulatory process.

In this case, while MAS oversees insurers from a financial perspective, ensuring they are prudently managed on a capital footing, it does not regulate their social mission. In practical terms, insurers can focus on financial solvency while customer welfare may not always be prioritised, so long as financial regulations are not breached.

There remains uncertainty around the Government's expectations regarding Income's social mission. This raises a key question: how far does the Government expect these social obligations to extend?

This leads to my third point. Without clear markers, it becomes difficult for any organisation to construct a deal that aligns with both financial and social responsibilities. When these boundaries are not well-defined, businesses face unpredictability, complicating long-term planning and strategic decision-making.

It is therefore essential that we continue building on our commitment to transparency, and the trust between businesses and regulators that have allowed Singapore to remain a competitive global hub. I would like to offer four suggestions to do this.

First, establishing clear markers at the outset of any major transaction is essential, especially when significant public interest is involved. Defining these boundaries from the start allows businesses and regulators to engage with a shared understanding, minimising the risk of misinterpretation, delays, or wasted resources. For businesses, the last thing they want is to dedicate months, or even years, of resources only to find out late in the process that their plans do not meet regulatory expectations. For regulators, addressing concerns earlier in the process would make interventions smoother, less contentious and more transparent. Early clarity ensures that both sides can operate efficiently, reducing friction and improving overall outcomes for all stakeholders involved.

Second, the Ministerial Statement also highlighted a delay in MCCY's involvement. Perhaps, earlier involvement of relevant agencies could have flagged potential deal breakers sooner, enabling businesses to address concerns early and avoid public intervention.

Third, I recommend that businesses be given an opportunity to address and correct draft plans before final decisions or interventions are made. In this case, had Income and Allianz been given the opportunity to address the Government's concerns earlier, before public announcements or interventions, many of the uncertainties and tensions may have been avoided.

Providing this opportunity would ensure that businesses and regulators work together more constructively. If businesses are not given a chance to resolve issues privately, it may lead to perceptions of unfair treatment or unpredictability, which could affect investors' confidence.

Finally, if deal breakers and resolution mechanisms are not clearly outlined from the outset, potential investors may apply a risk premium or discount when valuing businesses operating in Singapore. This uncertainty could deter future suitors or investors and affect our global standing.

Mr Deputy Speaker, Sir, I am not suggesting that we compromise on public interest. The Government must retain the power to act in the public interest, when necessary, particularly those that will affect the lower-income segments of society. However, we must ensure that this power is exercised fairly and predictably, with transparency on both sides.

The Ministerial Statement on Monday highlighted that MCCY may consider future legislative amendments to give the Government stronger levers over co-ops that may wish to be corporatised. With even more oversight in future, we need a regulatory environment where businesses understand their obligations with clarity and where the Government can protect public interest without being seen as overreaching. This balance is critical to maintain trust between businesses and regulators.

In conclusion, I support the Bill, and appreciate MCCY and MAS for their prudence and commend the Government's efforts to safeguard the public interest. At the same time, we must be cautious about the signals we send to the business community. Clear definitions of public interest, guidelines, early discussions on deal-breaking concerns and the protection of confidentiality are essential to fostering an environment of trust and cooperation. I thank the Government for the hard work to continuously refine the regulatory framework to ensure it remains predictable, transparent and balanced. With that, I support the Bill.

Mr Deputy Speaker: Ms Usha Chandradas.

5.18 pm

Ms Usha Chandradas (Nominated Member): Mr Deputy Speaker, first, let me begin by thanking the Ministers Mr Edwin Tong and Mr Chee Hong Tat for their Ministerial Statements and clarifications that were delivered on Monday. I support this Bill on the basis that it serves the larger public interest of protecting Income's social mission. Notwithstanding my support, I have three brief clarifications that I hope the Minister will be able to address.

First, has the Minister considered the impact that the enactment of this legislation will have on business certainty and the regulatory environment in Singapore? When Income and Allianz BV entered into this deal, the present law that we are debating today was not in existence. The deal might well have been structured differently if it were. The Government has been courageous enough to take a step back and re-evaluate the situation, when new facts were revealed – this is something that is admirable – and it is important to acknowledge the relevance of this and the fact that this was done quickly when the Government realised that new information was in its hands.

However, we need to be careful that we are not inadvertently sending a message to the world at large, that it is possible for corporate deals to be suddenly overturned by the Government, for legislation to be rushed through and for carefully planned corporate negotiations to be disrupted.

And so, my first question is this, how would the Government propose to mitigate the impact of such conclusions being drawn by investors and businesses, both in Singapore and outside Singapore?

My second question is on the history of corporate deals being overturned or blocked by the Government and the enactment of legislation contemporaneously to effect this. Has this happened in the past, and if so, what are these instances? Are there any defining factors that the Government can share with us, on when the "public interest" is deemed to be significant enough for interventions like this? I think more detailed explanations here will go some way towards assuring businesses and the general public, that this is not something that Singapore does regularly or on a whim.

My third question has to do with the applications of sections 26 and 27 of the Insurance Act. Minister Chee Hong Tat explained on Monday, and earlier today as well, that on an application of sections 26 and 27 of the Insurance Act, MAS had reviewed the high-level submitted information from Allianz based on prudential grounds. This involved focusing on whether Allianz was fit and proper, looking at its financial strength and track record, and looking at the interests of Income's policy-holders to ensure that these would be safeguarded with a new, strong, substantial shareholder.

The requirement in sections 26(2)(b) and 27(3)(b) of the Insurance Act is that a licensed insurer should continue to "conduct its business prudently", and that MAS' approval may be given if the Authority is satisfied that conditions are met. I note the Minister's view that there is no explicit provision in the Insurance Act for MAS to consider non-prudential-related factors in assessing such applications.

Just based on the literal wording of the Act though, MAS' approval is not automatic even if the conditions in sections 26(2) and 27(3) are met. I wonder if it could also have been possible to take a more expansive view of the word "prudent", given Income's activities as a co-operative which provides financial services to the underserved and given the special circumstances behind its journey to corporatisation? Would the Minister be able to explain further MAS' understanding and interpretation of the term "conduct its business prudently", as it is set out in sections 26(2)(b) and 27(3)(b) of the Insurance Act?

I believe a more detailed explanation on the present limitations of the Insurance Act will help us in this House to understand why these new, very specific amendments are being debated today and why they are required on an urgent basis. Notwithstanding my clarifications, I support the Bill.

Mr Deputy Speaker: Mr Ong Hua Han.

5.22 pm

Mr Ong Hua Han (Nominated Member): Mr Deputy Speaker, let me first declare that I work in a financial institution. Two months ago, at least in the eyes of the public, the proposed transaction at the centre of our debate today was defended quite robustly in Parliament.

Income's track record and the many assurances from Income and NE were repeatedly referenced, to justify that Income's social mission will continue to be fulfilled, even after a foreign company acquires a majority stake in it. On Monday, it therefore came as a surprise to many Singaporeans that the Government had intervened to stop the deal.

I note in MCCY's assessment, as articulated by Minister Edwin Tong, that one of the two key reasons why the deal was not approved in its current form, was because there were, and I quote, "no clear binding provisions or structural protections in the deal to ensure that Income's social mission will be discharged." It is now clear that the promises around Income's commitment to maintaining its social mission are not legally binding. In the absence of written or legally binding provisions, one cannot draw sufficient comfort or be reasonably confident that such assurances can be upheld, especially when the ownership structure becomes markedly different post-acquisition, and I agree.

The other key reason why the proposed transaction was blocked, pertains to the proposed capital extraction plan, a substantial amount of about S$1.85 billion over three years. To MCCY, this proposal materially changes the complexion of this transaction since the original intentions of the deal on the grounds of capital adequacy can no longer be defended. And I agree with this judgement as well.

I would therefore like to ask the Minister, were it not for the issue of capital extraction, would the Government still see fit to accept the assurances of Income and NE regarding its social mission in good faith? Or would the lack of clear, binding provisions or structural protections alone be sufficient grounds to merit the blocking of this deal? I hope the Minister could address this point with clarity and transparency, so that Singaporeans can better understand and fully appreciate the deliberations of the Government, especially when it concerns national assets to which Singaporeans have deep emotional ties. This is important in the context of this Bill, as the amendment introducing section 33(a) into the Insurance Act will now require the Minister's approval before the MAS may approve an application by a person to obtain effective control of or become a substantial shareholder of certain licensed insurers.

Sir, while the passing of this Bill runs the risk of appearing rushed, it will nonetheless enable the Government to uphold public interest in these pressing circumstances. Therefore, notwithstanding my clarification above, I support the Bill.

Mr Deputy Speaker: Mr Yip Hon Weng.

5.26 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Deputy Speaker, Sir, I rise to speak on the Insurance (Amendment) Bill 2024. While I understand the need for regulatory oversights, there are important clarifications I would like to raise.

First, Mr Deputy Speaker, Sir, this Bill introduces a new section that allows the Minister to approve or reject applications involving co-operative insurers based on what is considered "public interest". While this power can be necessary, it raises questions about accountability and transparency. What exactly does "public interest" mean in this context? Will there be clear guidelines to ensure decisions are made transparently and not subject to varying interpretations? Transparency is key when invoking public interest. How can we ensure that those affected have a clear understanding of the reasoning behind these decisions?

Mr Deputy Speaker, Sir, public interest must be more than just a catchphrase. It should come with clarity and accountability. Every decision should be transparent, especially when it directly impacts our people.

Second, Mr Deputy Speaker, Sir, I seek clarifications about the extent of the Minister's powers. The Bill grants the Minister authority to decide or veto sales or acquisitions. This raises a critical question: will there be a set of guiding principles for such decisions? Singaporeans deserve to know that decisions affecting them are made with their best interests in mind, free from undue influence. Clear guidelines can provide that assurance and help maintain trust in the decision-making process.

Third, Mr Deputy Speaker, Sir, we must consider the implications of this Bill for global insurers. How we wield these powers could send a strong message to international businesses. Will this Bill create uncertainty for global insurers looking to enter Singapore? How can we ensure that our regulatory environment remains predictable and welcoming for foreign investments? Singapore has built a strong reputation as a pro-business destination. Could this discretionary power be perceived as a barrier, making global insurers hesitant to invest here? Might it also discourage entities from collaborating with our co-operatives, fearing heightened Ministerial scrutiny?

We need to find a balance, one that protects our social objectives while preserving Singapore's status as a regional insurance hub. What assurances can we provide to international insurers that decisions will be made fairly and transparently? If we want to keep Singapore competitive, we cannot afford to close the door on international insurers.

Fourth, Mr Deputy Speaker, Sir, the Bill provides for an appeals process. But how exactly will this process function? Who will hear these appeals? Will it be the same Minister who initially rejected the application, or will there be an independent committee? For the appeal process to be truly fair, it must be impartial. If the same person makes the decision and hears the appeal, how can we be confident that justice will be served? An independent appeals process would instill greater confidence in those affected by these decisions.

In conclusion, Mr Deputy Speaker, Sir, this Bill is an important step in strengthening our insurance sector. But we must ensure that our approach is balanced and transparent. First, we need clear definitions of what "public interest" is to avoid ambiguity and ensure accountability. Second, we must establish guiding principles for the Minister's decision-making to ensure consistency and maintain public trust. Third, we need to strike the right balance between protecting our social interests and maintaining Singapore's attractiveness to global insurers. And fourth, we should implement an impartial appeals process to ensure that decisions are fair and inspire confidence.

I am also glad to see that it was reported that Allianz has agreed to consider revising its offer to Income after the current deal was prevented by the Singapore Government. This demonstrates a willingness to work within our regulatory framework. This also underscores a critical point: mutual respect between private companies and the Government is critical for maintaining a healthy business environment. It ensures that while we protect the interests of our people, we remain open to constructive dialogue with global investors.

Let us ensure that this Bill positions us for growth while safeguarding the interests of all stakeholders, both local and international. Let us keep the process clear, fair and consistent. This is not just about regulatory oversight. It is about protecting our reputation as a trusted financial hub and, most importantly, prioritising the well-being of Singaporeans.

Let us support the amendments with these considerations in mind, so that we can build a stronger, more resilient insurance sector. With this, I support the Bill.

Mr Deputy Speaker: Mr Raj Joshua Thomas.

5.30 pm

Mr Raj Joshua Thomas (Nominated Member): Sir, first, may I commend MCCY and MAS for taking this step to intervene in the Allianz-Income deal on the grounds stated by Minister Edwin Tong in his Ministerial Statement on Monday. The Government has chosen to do the right thing despite it being inconvenient and potentially politically inexpedient.

I have closely read Minister Edwin Tong’s Statement and cross-referenced it with Minister Chee Hong Tat's and Minister of State Alvin Tan’s responses to Parliamentary Questions on the deal at the August Sitting. I set out the relevant facts as the basis for my questions later.

In his August speech, Minister of State Alvin Tan said: “NTUC has explained the reasons for the deal with Allianz. Let me briefly reiterate the points that NTUC has made. The current situation for Income cannot be sustained and Income’s capital buffers have repeatedly come under pressure. NTUC Enterprise has supported Income with capital injections and will continue to do so. But NTUC Enterprise cannot do this on its own. That is why Income sought to corporatise in 2022, so that it could consider more options to access more capital”. In other words, as far as Minister of State Alvin Tan and MCCY were aware at that point, the deal would have put in more capital so that Income would be able to continue to fulfil its social mission.

This is borne out in Minister Edwin Tong’s Statement. Minister Edwin Tong said: “MCCY had no prior knowledge of the proposed transaction before the public announcements. When we first saw the announcements, we accepted the intent of the transactions, which is to strengthen Income. We saw that Income would be engaged in a strategic partnership with a major reputable player in the industry. This would strengthen Income’s capital base and allow it to have more access to capital. This is consistent with the representation that Income had made to MCCY at the point of corporatisation.”

The Allianz-Income deal, however, in its filings with MAS, proposed instead to extract capital from Income, by way of reducing share capital and returning it to Income’s shareholders. Income’s shareholders, of which Allianz would be the majority amongst, would receive some S$1.85 billion. MCCY was alerted to Income and Allianz’s filings by MAS, because MAS had assessed after the August Sitting that it would be relevant to MCCY to look at the proposed reduction of share capital.

The above having been said, I note that in his August speech, Minister of State Alvin Tan had said: “It is still a proposed deal, yet to be approved”. I also note that Minister Chee Hong Tat and Minister of State Alvin Tan were speaking in different capacities and, in fact, on different points. Minister Chee Hong Tat speaking on MAS’ role as regulator and the criteria that MAS looks at in approving such a deal, and Minister of State Alvin Tan addressing concerns as to whether Income would be able to continue to serve its social mission after the deal. I further note that Minister Edwin Tong said in his Ministerial Statement that MCCY had continued to do its due diligence on the deal after the August Sitting. To my mind, this would naturally be so, since as Minister of State Alvin Tan had stated the deal had not yet been approved. It was precisely in this exercise that MCCY’s concerns were piqued.

I can understand the regulatory process. Minister Chee Hong Tat has emphasised that MAS looks at the prudential aspect of a deal. Regulators look at specific criteria that are set out by statute or regulations. It is simply not possible for regulators to look at all and sundry and everything under the sun when considering a specific application or filing before it. As Minister Edwin Tong pointed out, the viability of this particular deal went beyond prudential considerations alone. It is, therefore, commendable that MAS, having heard Minister of State Alvin Tan’s speech in August, realised that this could be an issue and shared the filings with MCCY.

Sir, keeping in mind that this exchange of information had occurred before approval had been granted, I do wonder whether this would present itself as a breakdown of the sharing of information, as had been previously suggested, or is it instead evidence of the sharing of information that has now allowed and enabled the Government to make the correct decision.

But this having been said, given the factual matrix that I have outlined above, and having had regard to Minister Chee Hong Tat's Statement earlier that parties had entered into the transaction in good faith, I still have a nagging feeling that someone was perhaps trying to pull the wool over the Government’s eyes and that it was lucky that this inconsistency was caught out and this deal blocked. In this regard, Sir, I have several questions.

First, has the Government ascertained, or will it be taking steps to ascertain how is it that Income could negotiate, agree and attempt to execute a deal with Allianz that included initiatives that would have resulted in share capital reduction, the opposite of its representations to MCCY at the time of corporatisation. This is not a private matter in a private company. It is a matter of public interest because, along with the corporatisation, the Minister for Culture, Community and Youth had also granted an exemption to Income under section 88 of the CSA. This allowed Income to carry over approximately S$2 billion of surplus to the new entity, instead of it being distributed to members and, importantly, the surplus being transferred to the CSLA, which is applied for the benefit of the co-op sector generally. This means that monies that ought to have gone to a public fund have been denied.

In this regard, I set out some questions that the Ministries should ask Income, and I would further suggest that Income's responses should be made public.

I note that the Chairman and CEO of Income at the time of corporatisation and at the time of the announcement of the proposed deal with Allianz were the same persons. How involved were they and the senior management of Income in, on the one hand, making representations to MCCY and, on the other, arranging the deal with Allianz? Did they not see the contradictions?

I note, in particular, that Income made the following representation to MCCY in June 2022 that: “We believe that, pursuant to corporatisation, the Co-op", that is, Income, "will be regarded to offer a more attractive proposition to investors and strategic partners. This would, in turn, allow Co-op to raise capital more easily and thereby grow and unlock value for existing and new shareholders and policy-holders and further its social mission through a sustainability agenda”.

In contrast, a joint statement issued by NE and Income on 4 August 2024 was of a different tenor. There was no mention of raising capital. As such, does this elicit that Income and NE were cognisant that the Income-Allianz deal did not live up to the commitments that Income had made to MCCY? Furthermore, did Income approach MCCY after Minister of State Alvin Tan’s speech to own up that the deal contradicted its original representations to MCCY?

As raised in the August Sitting, the Chairman of Income is also the Chairman of the deal’s financial advisor. Did the financial advisor point out to Income the potential conflict between the planned initiatives and Income’s representations to MCCY? Furthermore, was legal advice sought on the potential conflict, and did the legal advice point out this contradiction?

I also note that the NTUC President and Secretary-General issued a statement on 5 August 2024 stating, amongst other things, that: “In this fiercely competitive environment, it became plain that Income can only continue to fulfil its social mission if it has access to additional resources and the ability to scale”. So, this begs the question, whether Income had briefed the NTUC leadership of the proposed initiative to reduce share capital?

Second, Sir, given that Income’s move to corporatise which included the exemption under section 88 was premised on it finding it difficult to compete and to fulfil its social mission, I think it is important that the Government require Income to explain how it is going to leverage on its current corporate structure to do so, given that the Allianz deal may be off. So, Sir, I think that Income has quite a bit of explaining to do.

Finally, Sir, I note that Minister Edwin Tong said that the Government has made a decision to intervene. This does not appear to mean that the Government has actually blocked the deal. I ask this because there are news reports that the deal is already off. But the reason for today’s Bill is precisely because MAS does not have a basis to reject the deal for reasons other than prudential aspects.

I would just like to ask the Minister for clarity on the process. Would it be that, after the passing of this Bill, that the Income-Allianz deal would be subject to the Minister’s approval and that the Minister would then not approve? If this is the process, as had been raised by the hon Member Ms He Ting Ru earlier as well, would there be any issues of retroactive or retrospective application of the law, given that the filings were done prior to the enactment of the relevant statutory provisions? Sir, notwithstanding my clarifications, I support the Bill.

Mr Deputy Speaker: Mr Keith Chua.

5.40 pm

Mr Keith Chua (Nominated Member): Mr Deputy Speaker, Sir, I stand to speak in support of the Bill.

As a concerned citizen, I had my share of questions when the announcement was made in July for Allianz to acquire a majority stake in Income. From a purely commercial perspective, the proposal may have made good business sense. Respected voices supported the proposal. Equally, there were some who raised valid questions and concerns with the limited information available at that time.

I am, therefore, pleased to note that we have in place checks and balances from the Ministerial Statement on Monday by Minister Edwin Tong, supported by Minister Chee Hong Tat, and, with this Bill, added measures to protect the interests of Singaporeans.

Having been engaged with both the social sector and the business sector, I have seen and continue to see, the constant challenges of balancing doing well commercially with doing good.

In efforts to better understand social enterprises in Singapore, the former Asia Centre for Social Entrepreneurship and Philanthropy at the National University of Singapore studied the NTUC social enterprise model along with several other social enterprises. Mr Deputy Speaker, may I mention that, at that point in time, I was the Centre’s Advisory Board Chair when several research and working papers were published during that period.

Allow me to quote from one of the working papers: "A genuine social mission is one that is defined at the founding of the organisation and hard-coded in its DNA through the by-laws, constitution, articles of incorporation or term sheets signed with the investor. When this is the case, there is less concern of mission drift or false marketing, that is, an organisation using a social mission as a branding spin when its intentions are purely financial. However, an organisation could outgrow its social mission or evolve over time as social norms and the landscape change and/or when its management changes. A social enterprise needs to be dynamic and alter its mission, vision and values to continue to stay relevant and the term 'rebirth' was proposed to acknowledge and articulate this characteristic.

A characteristic of a social enterprise is that the organisation is addressing through business processes a clearly articulated and institutionalised social mission that is contextually relevant to the community it supports. A second characteristic speaks to the integration of the business process with the social mission. A social enterprise is an organisation whose social mission is evident not only through the products and services it offers, but also in the way it operates and the impact it achieves on the ground. A third characteristic of social enterprises is that its social mission is evident throughout its operations, products, services and its impact on the communities it serves. Unlike traditional businesses conducting projects as part of corporate social responsibility (CSR), the social good done by a social enterprise is a part of the core business of the company. Even if delivering the social good is not its sole core business, it can be considered a social enterprise as long as its social mission is visible in every aspect of its work.

A fourth characteristic suggests that a social enterprise should have an intention and roadmap to sustainable financial performance. Even if it relies on multiple revenue streams, it should not be operated purely on a charity-buying model and should, over time, transition to generating increasing amounts of its revenue from earned income.

A fifth characteristic is that a social enterprise runs on strong business fundamentals designed to address the social objective with the attendant measurement of outcomes falling within the constraints of the legal registration form chosen.

Finally, a sixth characteristic of social enterprises is that they are continuously balancing the tensions between their financial and social objectives to meet their social purpose while remaining financially stable and sustainable."

I will just mention that this came from a working paper called "Finding a common language for Social Enterprises in Singapore".

The proposal for the divestment of a majority stake in Income will now be off the table with the passage of this Bill. So, what next for NE and Income?

Details that surfaced on Monday disclosed that NE would receive both the proceeds from the proposed divestment and a subsequent capital extraction, thus freeing up funds which could be deployed for continuing the broader social mission, presumably beyond Income.

As Income is profitable and currently financially viable, the Board and shareholders may not need to be in a hurry to find another option. Allianz has also indicated that it will review the proposal and the Government's concerns.

I may be repeating options that NE and Income may already have considered.

One, consider the option of a public listing of Income as a profitable and socially responsible business. Today, there is increased interest in social investing, and increasing amounts of capital are looking for suitable investments in this class. The current investment options on our own stock exchange, for example, for profitable companies with clear social mission, are extremely limited. A public listing would both bring in fresh capital and enable NE to free up a portion of the Income investments.

Alternatively, if it is decided that Income remains wholly owned and remains private under NE, the Board and Management could look into steps that would have been taken with the proposed transaction with Allianz to achieve capital extraction over time while keeping Income sustainable. This could result in releasing resources for the broader social mission.

This House may continue to debate and discuss what has happened. And from that, there may well be useful lessons. However, we must be forward looking and find appropriate solutions as there would seem to be significant opportunities to enhance the social mission. Doing well for a socially driven enterprise needs its own definition, just as we are now embarking on a refreshed definition of personal success.

We have a national benchmark in Temasek as a national commercially-driven organisation that also does amazing good from the commercially-driven financial returns. NE can be the national benchmark for a model socially-driven organisation. Doing well is relative. Doing well can, therefore, be more clearly articulated for NE, which, going by the latest annual report, demonstrates a healthy financial state and a commendable list of impactful social initiatives for Singaporeans.

Mr Deputy Speaker: Mr Saktiandi Supaat.

5.49 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, Sir, this urgent Bill was tabled two days ago to provide "clear statutory basis" for MCCY's concerns to be taken into account in the consideration of the Allianz-Income transaction.

One thing we should not miss is that I do not think there are many countries, if any, which can do what we have done in Singapore. First, for me and my various colleagues to be able to file Parliamentary Questions on an ongoing regulatory application during the 6 August 2024 Sitting and invite the Government to scrutinise the deal and ask for more information in the public interest. And two, for the Government to be open, transparent and adjust its stance based on the new information obtained.

But there are always two sides to the same coin, and I have some clarifications to raise as I am concerned about how this urgent Bill may be perceived by others outside of this House.

As we are well aware, the Allianz-Income proposed transaction is still under regulatory review. While Minister Edwin Tong has announced the Government's view that it would not be in the public interest for the transaction to proceed in its current form, the fact remains that the requisite MAS approval has not yet been given for the deal to proceed.

How do we ensure the Government's ability to enact laws to block commercial transactions do not negatively impact on local and foreign investors’ confidence in Singapore’s legal and business environment? Should such laws only operate prospectively, instead of retrospectively to affect commercial parties who could not have reasonably accounted for the change in laws? And I believe some other Members in this Chamber have actually raised those questions.

It is heartening that the fallout has been limited at least for this particular proposed deal. Allianz released a statement late on Monday that it will consider revisions to the proposed transaction structure, when it could have walked away altogether. May I ask the Minister whether and what steps have been taken to engage Allianz, as opposed to Income and NE? If no steps have been taken so far, is any engagement being planned?

As with any potential purchaser, Allianz would have incurred time and expense, alongside its legal and other advisors, to study and prepare for the deal before submitting the application to MAS for approval. It could only have done so on the basis of the prevailing laws, and these amendments in this Bill would not have been in its contemplation then.

Investor concern is not just on the buy-side; the uncertainty extends to the sell-side as well, where investors cannot be certain whether their investments will suddenly become illiquid or considerably less liquid as a result of subsequent Government intervention.

Sir, what message does this Bill send to prospective investors considering investments into Singapore? Will this Bill affect, for example, existing free trade agreements (FTA) on activities in the financial services sector, including the EU-Singapore FTA? Mr Deputy Speaker, Sir, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Public interest. What exacerbates this concern is the lack of clarity around the basis that approval for a proposed transaction may be withheld. "Public interest" is one of those things where it is difficult to define, even though you probably know it when you see it. What we do know is that it is a lower bar than the "national security interests" protected under the Significant Investments Review Act (SIRA), when Minister of State Alvin Tan replied to me that Income’s "social purpose" is unlikely to meet the high bar to be protected under SIRA.

Given that the proposed new section 33A(3) specifically identifies consultation with the Minister responsible for the Co-operative Societies Act 1979, is "public interest" under that subsection only to be assessed from that Ministry's mission and objectives? That seems to cut against "whole-of-Government" approach that Minister Chee spoke about on Monday.

I am conscious that it is difficult, if not impossible, to set out an exhaustive definition of "public interest". However, given the use of the term across other legislation requiring Government approval for changes in control, such as the Transport Sector (Critical Firms) Act 2024, perhaps it would be more reassuring to foreign investors for there to be a one-stop summary of the various classes of target companies and the specific regulatory clearances that are required prior to investment. I hope the Government can consider that suggestion.

(In English): Existing powers. One issue that was also raised on Monday was whether the amendment in this Bill is necessary in light of the existing legislative powers. Sections 26 and 27 of the Insurance Act 1966 provide that the "MAS 'may' approve an application to take over or control substantial shareholdings in licensed insurers if the applicant meets the prudential requirements". The use of the word "may", instead of "shall", seems to suggest that there could be other considerations beyond the prudential requirements.

The explicit mention that MCCY's views should also be considered in this Bill could set a worrying precedent. What if, for a future transaction, public interest considerations of other Ministries become relevant? Would we have to separately legislate on an urgent basis again? Instead, reading sections 26 and 27 in the inclusive manner that I have suggested above, potentially allows new considerations from being taken into account at a whole-of-Government level.

Mr Deputy Speaker, this Bill should also not be for the purpose of ensuring information flows between different Government arms. Following the Allianz-Income episode, I am sure MAS is now aware of the potential interests that other Ministries or Government agencies might have in the regulatory applications that it processes.

Minister Chee Hong Tat explained that it did not occur to MAS to consult with MCCY, particularly on Income's previous exemption from section 88 of the CSA, before the Parliamentary Questions of 6 August 2024. This is understandable because it is not an issue that would arise in most applications made to MAS for approval, which would not relate to co-ops.

However, my question is whether any conditions were attached to the exemption for Income to carry over S$2 billion of accumulated surplus to its new corporate form. What were those conditions?

Instead of enacting the amendment in this proposed Bill, would MCCY not be able to exercise effective regulation by imposing relevant conditions in the exemption that was given, for example, that any subsequent change of ownership must be cleared with MCCY, or that the carried-over surplus of S$2 billion had to be returned to the CSLA if certain prescribed events occurred? On that note, can MCCY still vary the conditions of that exemption today?

In conclusion, Mr Deputy Speaker, ultimately, it is a strength that our Parliamentarians in Singapore can raise issues and have the Government table and pass legislation in less than three months. For this instance, it is even less than a week. But it is a power that we must exercise extremely sparingly, lest our legal and business environments are perceived to be uncertain and unpredictable.

Mr Deputy Speaker, notwithstanding the clarifications sought, I support the Bill and the Government’s decision to block the Allianz-Income deal in its current form.

Mr Deputy Speaker: Ms Jessica Tan.

5.57 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Deputy Speaker, I would like to declare that I am Advisor to the Singapore Insurance Employees' Union.

Mr Deputy Speaker, thank you for allowing me to join in the debate on the Insurance (Amendment) Bill. The proposed amendment will allow MAS to consider the views of the Minister charged with the responsibility for co-ops to withhold approval for an application to obtain effective control or to become a substantial shareholder of an insurer that is a co-op or linked to a co-op, if it is in the public interest to do so.

For the reasons set out in the Ministerial Statement by Minister Edwin Tong on 14 October 2024, I support the Government’s decision that it is not in the public interest for the Income-Allianz deal in its current form to proceed.

The amendment is required if Minister Edwin Tong, as Minister in charge of CSA, views on the deal are to be considered, as Income is not a co-op but a corporation. As a corporation, the approval for the deal rests with MAS under the Insurance Act.

There are a few points I wish to touch on in my speech. One is the effectiveness of the due process for review and approval of the deal, and that the interest of Singapore and Singaporeans is protected. Two, that the amendment proposed is targeted and scoped to address the co-op. This upholds the stability of Singapore as a key financial services hub, which includes insurance, a key asset class for businesses that invest in Singapore.

Let me now touch on due process. The hon Member Mr Saktiandi had also mentioned this, that the process that we are currently going through has allowed the decision to halt the deal and the fact that we are here today to debate and approve the amendments to the Insurance Act for MAS to consider the views of the Minister-in-charge of co-operatives, demonstrates that due process works and that it supports the making of sound and the right decisions.

I want to commend the work of the officers from both MAS and MCCY. There has been some questions on the silos. We have got to be fair to our officers. They are doing their work. I am glad that when they spot an important information that is required, they have the courage to speak up and bring it up; and the process allows for that. So, let us not put too much criticism on this process because it might instill an opposite behaviour. We need to protect this as well.

When Allianz announced the offer to buy 51% stake in Income in July this year, Members of Parliament, from both sides of the House, filed Parliamentary Questions. This allowed for clarifications, even as the relevant agencies, in this case MAS and MCCY, were reviewing the deal.

Work to assess the details of the deal and the due diligence on the deal by MAS and MCCY continued, even after the clarifications in Parliament. This has allowed Minister Edwin Tong to be appraised of the right information and, therefore, inform us that given the context of the exemption from section 88 of the CSA granted to Income when it was incorporated in 2023, there were concerns that these terms and the structure of the deal and the ability of Income to fulfil its social mission would be impacted.

Hence, the decision not to approve the deal in its current form and the Ministerial Statement made in Parliament on Monday this week, to inform Parliament of the decision. And it is the right decision.

Let me talk about the proposed amendments to the Insurance Act. Like many, I am also very concerned because Singapore is a recognised financial hub with many financial institutions operating in Singapore. Businesses invest in Singapore because of the confidence in Singapore and our regulatory process and the certainty and predictability of the environment.

The role that MAS plays in the supervision and the development of Singapore's financial services sector, providing stability for businesses. The life insurance market in Singapore and the insurance market, as a whole, is active and competitive with numerous players vying for market share. The industry is regulated by stringent requirements under the Insurance Act and regulatory capital requirements.

So, as this is an urgent Bill, it is appropriate that the proposed amendments are scoped and not broad-based so as not to impact the larger insurance market in Singapore or cause undue anxiety amongst insurers in an already regulated sector.

I support that the amendment is specific and applies only to a licensed insurer that is the subject of an application under sections 26 and 27 of the Insurance Act and where the licensed insurer is a co-operative or linked to a co-operative. This calibrated approach makes it clear on the reasons for taking such an approach and, therefore, to some extent will give some assurance to the business community.

As explained by Minister Edwin Tong in his Ministerial Statement and as shared by Minister Chee Hong Tat in his speech earlier, the Government recognises that insurance co-operatives are a special category of insurers with a social mission and the proposed amendments to the Insurance Act are necessary to allow MAS to consider the views of the Minister overseeing co-operatives and for the Minister-in-charge of MAS to withhold approval for the deal, if it is in the public interest to do so and for the reasons that Minister Edwin Tong had explained in his Ministerial Statement on Monday. So, I believe that the decision taken and the proposed amendment to the Insurance Act is a balanced one.

It is a balanced approach to preserve the unique role of co-operatives and their social mission in Singapore while staying open to the appropriate structures that will allow the strengthening of co-operatives or entities linked to co-operatives, to enable them to continue to meet its social mission in a sustainable manner.

I must say that co-operatives operate in a very unique way in Singapore and the very reason why we are taking the measures that we are taking today and we are here to debate this is because of their special nature and the recognition of that. So, I do believe that it is a calibrated approach and it is a balanced one. Mr Deputy Speaker, I support the Bill.

Mr Deputy Speaker: Senior Minister of State, Desmond Tan.

6.05 pm

The Senior Minister of State, Prime Minister's Office (Mr Desmond Tan): Mr Deputy Speaker, Sir, I would like to declare first, that I am serving as a labour Member of Parliament in NTUC. The genesis of today's Bill is because of the proposed transaction between Allianz and Income Insurance.

Specifically, today, it is about amending the Insurance Act to provide a clear statutory basis for MCCY's views to be considered in any approval under sections 26 and 27 of the Insurance Act in such applications related to insurance that are either co-operative or linked to a co-operative. Minister Edwin Tong, on Monday, has shared MCCY's concerns over the terms and the structure of the proposed transaction.

So, please allow me to take the House through the key considerations why NTUC supported the proposed deal and our commitment to the larger social mission.

Let me start by saying that Income is no ordinary insurer. It holds special significance for the Labour Movement as our first social enterprise. Income has played an important role in providing affordable insurance for workers and Singaporeans at large. When NE briefed the NTUC Central Committee (CC) about the proposal, it was, therefore, difficult for the unions to learn that NE was planning to sell a majority stake in Income to Allianz.

But we understood the challenges that Income faced. To do good, it must also do well. We knew this has become even harder amidst a more competitive and tightly-regulated insurance landscape. NE went into this deal to strengthen Income in the longer run and the NTUC CC agreed with the strategic intent and approached it in good faith.

I hear and understand from various Members in the House that there were many questions and points that were raised by Members but today's session is focused on the amendment Bill. There are questions that are posed to NTUC and, especially so, there are many questions that were posed to Income and NE. I will take these comments, questions back and, of course, to the relevant entities so that they can find a suitable occasion to address them.

But specific to a question that was raised by both Mr Leong Mun Wai as well as Mr Raj Joshua Thomas, I thought maybe I should address the question about whether the NTUC CC was informed of the capital reduction. First, let me just briefly explain the structure and the relationship between NTUC and NE. NTUC is a major shareholder of NE, which is the holding entity of the social enterprises, which includes Income.

In the prevailing governance model, NTUC, as a shareholder of NE, has delegated to NE Board to make decisions pertaining to all businesses and do not get involved in the day-to-day running. Specific to this transaction, NTUC CC was briefed by NE and Income on the strategic imperatives for the deal and did not highlight to CC, the capital reduction plan.

In fact, CC and myself only knew of this on Monday at the Ministerial Statement. As I am made aware now, from the clarifications with NE and Income, Income as a non-listed public company would have to comply with the legal responsibility of non-disclosure of commercially sensitive information on the Allianz plans post-acquisition, a point that Mr Leong Mun Wai also brought up, because as a non-listed public company, NTUC and Income are subject to the Singapore Code of Takeover and Mergers.

Let me talk about the social mission of Income, NE and NTUC. Income had also committed to its social mission, which included providing low-cost insurance schemes for union members and keeping premiums affordable for workers in the lower-income and the marginalised segment.

Income pledged $100 million over the next 10 years from 2021 to provide social mobility among the low-income and support the well-being of our seniors. I would add that the NTUC social mission goes beyond insurance.

Over the past 10 years, NTUC social enterprises, including Income, did much for the social good of Singapore through donating nearly $300 million to support the charitable works of NTUC Foundation, Bright Horizons Fund, Health for Life Fund, NTUC Education and Training Fund, NTUC-U Care Fund and Income Orange Aid.

The proceeds from this transaction would also enable NTUC and NE to continue doing good in other areas, such as in elder care, as our population ages, to continue our social mission as we have done for the last 50 years.

We appreciate that Minister for MCCY, in his Statement, acknowledged that Income, with NE's support, has grown through the years to serve Singaporeans' needs. He also mentioned that the Government understands and accepts the strategic purpose behind Income's corporatisation and the subsequent exercise to form a partnership with Allianz: to strengthen Income and to make it more financially viable in the longer term.

Minister Chee Hong Tat has also acknowledged that NTUC had acted in good faith and in the interests of workers and members. So, in fact, if you look at it, the Government and NTUC share the same strategic intent and broader objectives for Income and the co-operative movement.

But as far as the specifics of this transaction is concerned, there is now, perhaps, a difference in view, as Minister for MCCY has clearly laid out the concerns over circumstances behind Income's corporatisation and the Ministerial exemption given as well as the terms and structure of the proposed transaction.

NTUC has reviewed the matter and accepts the Government's considerations and decisions on the proposed transaction. We also support the Bill to amend the Insurance Act to provide a clear statutory basis to provide for MCCY's view to be considered in applications related to insurance that are either co-operative or related to co-operative. We note that the Government remains open to any arrangement that Income may wish to pursue, whether with Allianz or any other partners, so long as the concerns highlighted are fully addressed. Income has committed to study carefully, the implications of the Ministerial Statement by Minister for MCCY and the amendments of the Insurance Act and will work closely with the relevant stakeholders to decide on the next course of action.

From the outset, NTUC's objective was to build a stronger Income so that it can do well and it can do good. The Labour Movement, which includes NTUC and the enterprises, are united in our purpose and we will continue to do right by our people and what is necessary for the longer-term interest to serve workers and the people of Singapore. [Applause.]

Mr Deputy Speaker: Minister Edwin Tong.

6.13 pm

The Minister for Culture, Community and Youth (Mr Edwin Tong Chun Fai): Thank you, Mr Deputy Speaker. Sir, on Monday, I made a Ministerial Statement, raising a number of points and explanations, which I do not propose to go back into. This afternoon, there have been a number of contentions concerning various parties and suggestions as to who knows what and at what stage and which party.

Let me just be clear that I am not privy to any of Income or Allianz's thinking about the transaction or its deliberation and the views that they may have taken, in relation to or arising from the transaction. As I have explained on Monday, MCCY was given information, which it reviewed, looked at carefully and decided that it would not be in the public interest to allow this transaction to proceed.

Thereafter, we discussed and proposed for this Bill to take effect so that MAS and the Minister overseeing MAS would have the ability to take on board MCCY's views in relation to this particular transaction. So, I hope that makes it quite clear as to where I am coming from when I give my answers today.

There were also a number of Members who asked what happened behind the scenes, what steps were taken and whether or not some parties were approached.

Let me first start by saying that the decision to take this step was not one that was taken lightly. It was after very careful, deliberate consideration and even after that, it was decided that we ought to do this in as narrow a way as possible, as I had explained in Parliament on Monday. In addition, the Government decided to act after we came to this conclusion and to do it in as transparent and as forthright a manner as possible. Let me explain.

First, we decided to give a complete account of the basis of our objections and our views right here in Parliament. As I have explained, there are considerations because it is a live deal. There is price-sensitive information, market-sensitive information, but the moment we were aware as to what steps we were going to take, how we proposed to take them, we came here, made a Ministerial Statement and explained fully, and then tabled the Bill.

We have made it clear that the Government does not have concerns over Allianz's standing or suitability to acquire a majority stake in Income. Allianz is a major global insurance company and asset manager, and we acknowledge that it can bring financial strength and expertise to Income. Our objections were to the structuring of the transaction and some of the terms of the deal, as I had explained on Monday.

Second, we framed this Bill because we acknowledge that under the Insurance Act today, there is no provision explicitly which allows MAS to consider the views of MCCY in the case of an application relating to an insurer that is either a co-op or linked to a co-op. Therefore, we tabled the Bill, as I mentioned, narrowly to amend the Insurance Act to provide a clear statutory basis for MCCY's views to be taken into account.

Third, as I mentioned, the amendments are scoped specifically to only apply to a licensed insurer that is subject to an application under sections 26 and 27 of the Insurance Act and where the licensed insurer is a co-op, has acquired the business of a co-op, or as substantial shareholder or effective controller which is a co-op. We are not seeking broad powers that cover general insurance transactions or of a broad remit in nature.

Sir, we have chosen to act in this way because we feel that that is the most transparent and above-board manner. It will uphold rather than diminish Singapore's consistent reputation as a hub for business that is open, transparent and rules-based.

Mr Saktiandi asked whether and what steps have been taken to engage Allianz and if any engagement had been planned. Sir, MAS and MCCY, as I had explained, we sought to understand the plans and the proposed transactions. So, we obtained information, we studied them, and once we assessed and decided that it is not in the public interest to proceed with the deal, we thought it is better to take an open and transparent approach in the manner that I have outlined.

Mr Neil Parekh and Mr Mark Lee raised some questions around social mission. I think Mr Chua, in particular, has related his own experience. Sir, it is very broad and I think Mr Chua's speech does acknowledge that it is sometimes in the nature of the way in which social mission has to be carried out and it also has to evolve to match the aspirations and the needs of each generation.

So, by definition, there has got to be a level of flexibility, malleability, which allows the parties charged with their social mission to adjust and to take steps to adjust. In this case, parties would have heard from my Ministerial Statement that Income – and I think earlier on, Members heard Senior Minister of State Desmond Tan speak to that as well – had reiterated that it would discharge its social mission at the point of corporatisation and exemption and also at the point of this transaction.

Specifically, in the case of Income, it has over the years been very clear in seeking to expand its social mission such as providing for the needs of persons with disability, migrant workers, low-income workers. This is how it looks at its social mission portfolio and I am not saying that it may not change down the road. Depending on the needs of society, that may well need to change.

So, in some ways, you have got to give flexibility to the manner in which a social enterprise looks at its mission in the context of the industry that it is in and decides what specific products to raise. I think Ms He also asked whether one day it could become health insurance. I, as I said, I am not speaking for Income, but I would not see that it is so unconnected from its current life insurance business that it may well be covered. But it is something that I express no view on, save to say that I think we need to give some degree of flexibility and malleability to the concept.

I want to also say that the point of applying for exemption from section 88, a point I alluded to earlier, Income did emphasise that it continues to remain strongly committed to its social mission of providing affordable, accessible and sustainable insurance to the underserved communities. In relation to what Mr Chua said, what Mr Parekh said, that definition by Income itself gives you some indication as to how they see the social mission and how they see themselves discharging that social mission.

Whilst I am on the point about the exemption, Ms He raised a couple of points on the exemption and I would like to address them.

To recap, I had explained previously the circumstances in which Income, the co-op, proposed to convert its legal status from a co-op into a corporate status. There were advantages that it felt it could avail themselves of, such as, for instance, there were limitations on the extent to which dividends could be declared by a co-op and that itself made it less attractive for investors, for strategic partners to come in to work with Income. It also needed the ability to broaden its capital base. I think there are some debates about what we mean by capital buffers, capital resiliency. I will address that in a moment.

But what is important to bear in mind in relation to Ms He's question on representations and what was discussed in the context of the corporatisation and the exemption, Income said very clearly it wanted to do better in the insurance business. It emphasised that it would continue to do its social mission as before, based on a quote I read earlier, and that it would only change its legal form as far as its business was concerned.

What is also important to bear in mind in the context of the exemption is that section 88 applies, as I explained, in the context of a social co-op seeking to wind up its business, to cease its business, stop altogether and then after paying off its debts and accounting for other charges, it will have surplus or it may have surpluses, which then comes into the consolidated fund. That is the raison d'etre behind section 88.

In the context of Income, the co-operative, the raison d'etre, or purpose, is quite different. First, it was being liquidated and wound up, it was not ceasing its business. In fact, on the contrary, it was trying to do its business better in a corporate vehicle that would allow it to reach out to strategic partners, access capital and so on, to do its business better. It was fundamentally not winding up its business, not stopping. And therefore, on that basis, it needed to then say, I would also have these surpluses, which I had accumulated before, brought into the new entity. It was on that basis that we granted the exemption for the surpluses to also flow through into the new corporate entity.

Ms He also asked whether there is a link between surpluses and social mission. As I had explained earlier, I think we have to give a degree of flexibility to the entity charged with that social mission to decide how to apply it. In the context of Income, as it stood post-corporatisation, its majority shareholder was NE, also a co-operative. It also had a number of other smaller minority shareholders, amongst which were also co-operatives.

In that context, we left it to them to decide how you want to carry out your social mission, how you would deploy the surpluses. You may offer migrant workers insurance; you might offer mental wellness insurance and so on. It is something that I think we need to give them a broad remit over, given especially that they have converted into a corporate entity, a point that I made on Monday as well. You cannot, on the one hand, say you can corporatise, but on the other hand, you still have to behave as if you are a co-operative entity.

Sir, I hope that answers Ms He's questions around the surpluses and the link to the social mission. I would add, Sir, that it is not for me to say how Income ought to have structured its transactions with Allianz or with any other party.

What we do know is, in this present arrangement, for the reasons I have set out, which I will briefly summarise in a moment, we were not comfortable that after this transaction, given the context in which it was done, that Income would be able to carry on with its social mission. The reasons we came round to this view, if I may reiterate, were the capital reduction occurring so soon after the exemption, the amount that was involved, the fact that there was no arrangement within the terms of the present transaction which would safeguard or ring-fence the advancement of Income's social mission, nor were there any structural protections in the terms of the proposed transaction that would allow us to have comfort that its social mission would be protected. We were also not clear what other adjustments or changes Income might be able to make thereafter to its portfolio, whether it would serve this area of underserved in the insurance business, trim its portfolio, change it altogether or reduce. There were also no controls there.

So, cumulatively, these factors, taken in the context of this transaction, where Income would cede majority control, were the reasons why we felt in this case this was not acceptable.

As to what is acceptable, it is not for us to speculate, and if the parties, as they have indicated publicly, wish to re-evaluate, reconsider, we will consider that when they have structured any new arrangements.

Sir, finally, I want to address Ms Hazel Poa's speech. She makes the case that the 4 August 2024 statement by Income is misleading. I think the Member quoted the words "capital resilience" which I think it is paragraph 7 of the statement that she was reading from. Am I right?

Ms Hazel Poa: Yes.

Mr Edwin Tong Chun Fai: Yes. Paragraph 7 talks about the need for the transaction to take place so that Income could build up capital resilience.

The Member also spoke about capital buffers coming under pressure and questioned whether that statement is true. The Member also made the point, effectively, that the Member is not able to reconcile the capital reduction with the need for the proposed transaction to seek capital resiliency. Would I have accurately summarised the Member's contention?

Ms Hazel Poa: Yes.

Mr Edwin Tong Chun Fai: Yes. Sir, the transaction is between two insurance companies and part of the arrangement following the transaction was a capital optimisation exercise. In the context of an insurance company, I think Members would understand that there is a need to maintain a capital adequacy ratio. The ratio is determined either by reference to the assets you have or the liabilities you carry. Either one of them can affect your capital adequacy ratio. And consequently, either one of them can affect your capital resiliency. If you increase capital, you can have a better capital adequacy ratio. Similarly, if you decrease your liabilities, you can also increase your capital resiliency and ratio.

On that basis, this arrangement allows for Income to reinsure part of its portfolio of risk. And the moment it is able to reinsure that portfolio of risk, it would not have to maintain that level of capital to meet the capital adequacy ratio.

So, in that context, even in the proposed plan for a capital reduction to take place, if you have a portion of the portfolio that has been reinsured and taken off your liability books, that will contribute towards a more healthy and positive capital adequacy ratio.

I do not have details and specifics of the numbers and the plans, but that is the principle on which this was done. That is why we are able to say, as I did on Monday, that after evaluating the capital optimisation plan, MAS was satisfied that despite the capital reduction taking place, Income, the new entity, would still be projected to meet all its capital adequacy ratios with a healthy margin. I hope that explains. And that is why on Monday I said this statement is not misleading.

6.29 pm

Mr Deputy Speaker: I think we will take clarifications after the political office holders (POHs) have provided their statements. Minister Chee Hong Tat is next. But first, Leader.

Debate resumed.

Mr Deputy Speaker: Minister Chee Hong Tat.

6.30 pm

Mr Chee Hong Tat: Mr Deputy Speaker, I thank hon Members who have supported the Bill. I note that the WP plans to abstain and is not supporting the Bill.

Members have raised several important considerations relating to the Bill and I will summarise into three categories: first, how to strike a balance between regulations to protect public interest and maintain investor confidence; second, how does the Government ensure that inter-agency information exchange and coordination does not compromise on commercial confidentiality; and finally, clarifications on the capital reduction plan, Bill parameters and coverage.

Sir, please allow me to address the key points and the questions that Members have raised. Mr Liang Eng Hwa, Mr Saktiandi Supaat, Ms Joan Pereira, Mr Neil Parekh, Mr Mark Lee, Ms Usha Chandradas and Mr Yip Hon Weng have recognised the merits of the Government's intervention in this deal, while raising questions about its impact on business confidence and Singapore's role as an international insurance hub. They also asked about the likelihood of future Government interventions and how transparency can be maintained to preserve trust in our system.

I would like to assure the House that Singapore remains committed to upholding our status as an open, rules-based and pro-enterprise business hub. The same applies to MAS as the financial sector regulator. There is no change in this regard. We will continue to welcome investors with our business-friendly operating environment. When legislative amendments are proposed, the Bills are presented and debated in Parliament in an open and transparent manner. We would explain the rationale for the proposed changes, just like what we are doing now for this Bill.

MAS maintains a regulatory approach that is consultative and provides stability and predictability for industry players. As a standard practice, MAS consults on major policy and legislative changes. For complex policies, there could be a series of consultation papers to obtain feedback from stakeholders over an extended period. During these consultations, MAS would incorporate relevant feedback and address concerns that arise.

This Bill is an exception due to its urgency, because the deal with Allianz is under consideration by shareholders, and it is tightly scoped to co-operative insurers, insurers that have assumed the business of a co-op, or have a substantial shareholder or effective controller that is a co-op. This recognises that insurance co-ops are a special category of insurers with a social mission. As there is currently no provision in the Insurance Act which allows MAS to consider the views of MCCY in the case of an application relating to an insurer that is either a co-op or linked to a co-op, the proposed amendments would allow the Minister-in-charge of MAS to consider the views of the Minister responsible for the administration of the CSA and to withhold approval involving such applications if the Minister-in-charge of MAS considers that it is in the public interest to do so. The Bill does not affect any other insurer or the financial industry at large.

Mr Saktiandi asked about the Bill's impact on existing free trade agreements for activities in the financial services sector. It does not impact our free trade agreements. As I have explained earlier, we do not have concerns with the suitability of Allianz to be a majority shareholder of Income. Our concerns lie in the terms and structure of this particular deal, and such concerns would apply whether the acquiror is Allianz or any other entity, and whether the acquiror is local or foreign.

To Mr Neil Parekh's comment that control of Income should not be ceded to foreigners, I would reiterate that the Government agrees with NE's intention and Income's intention to find a strategic partner to strengthen its competitiveness and capital base in the long term so that it can continue to do well to do good. If the concerns of MCCY can be addressed in a future deal, the Government is open to consider such a proposal, whether it is from a foreign or local entity. The most important consideration is the outcome – that Income becomes a stronger entity that is able to serve its policy-holders well and fulfil its social mission effectively.

To Mr Saktiandi's question and also Mr Leong Mun Wai's question on whether we have engaged Allianz, the answer is yes, and they have indicated that they understood the reasons for the Government's decision. Mr Leong can have a look at their public statement.

Mr Neil Parekh asked how the Government will ensure that any future partner can contribute to the financial strength of Income, while still preserving its social mission. MAS has regulatory requirements and guidance in place for insurers to maintain sufficient capital reserves to meet policy-holder claims, including under adverse conditions, and for insurers to have robust risk management frameworks in place. As an insurer, Income continues to meet these requirements. With the Bill, the Minister-in-charge of MAS can, in giving his approval for an entity to obtain effective control or substantial shareholding in Income, impose conditions to ensure Income's commitments to its social mission are upheld post-transaction.

We agree with Mr Mark Lee that businesses should be given an opportunity to address and correct draft plans before final decisions or interventions are made, and this is, in fact, what MAS has done for the proposed transaction. As highlighted in Minster Edwin Tong's Ministerial Statement, while the Government has decided that it would not be in the public interest for the transaction, in its current form, to proceed, we are open for NE to work out a new deal, whether with Allianz or another entity, which can address MCCY's concerns.

Sir, there is a balance to be struck between effective Government functioning through information sharing and preserving commercial confidentiality to maintain investor confidence. Several Members spoke about this. And as I explained in the House on Monday, information provided to MAS as part of its supervisory dealings with financial institutions, including Income and Allianz, is confidential and not normally shared with other Government agencies. We recognise that companies submit such information for a specific regulatory purpose and not to enable general Government evaluation. And as Mr Mark Lee correctly pointed out, some of this information may involve sensitive decisions.

In this particular instance, Income had special characteristics. As a former co-op, it had previously been under the regulation of MCCY before its corporatisation. MCCY maintains an interest in whether Income continues to perform its social mission, as this was the representation given when Income was allowed to corporatise. Hence, while conducting its assessment, MAS considered that it was in the public interest to share the information with MCCY.

Ms Joan Pereira and Mr Mark Lee asked whether the information sharing and coordination among agencies could have been done earlier. MAS received business projections of the cash remittance in mid-July and was reviewing the information. As the MAS team was still assessing the proposal, they did not surface this information to the MAS Board before the 6 August Parliament Sitting. I had explained this on Monday. After the Parliamentary Sitting on 6 August, MAS saw that Income's planned capital optimisation and cash remittance could be relevant to MCCY's views on the proposed transaction and shared the information with MCCY. The Government then reached a view that it was not in the public interest for the deal in its current form to proceed.

Ms Jessica Tan, Mr Saktiandi and Mr Raj Joshua Thomas explained this well. The decision to halt the deal in its current form and the fact that we are here today to debate and approve the amendments to the Insurance Act demonstrate that due process works. It is about coming to Parliament after putting together the full picture, working across the whole-of-Government to see what is the overall assessment of how to move forward on this important issue, and then coming to Parliament to present the information and proposals for Parliament's approval.

I wish to thank Ms Tan, Mr Saktiandi and Mr Raj Joshua Thomas, and also other Members for their support in clarifying the facts and, importantly, for showing appreciation to our public officers in MAS and MCCY. As Ms Tan said, they were working hard and they were doing their jobs.

In contrast, WP's Assoc Prof Jamus Lim and Mr Leong Mun Wai from PSP took a different approach. The Members made serious allegations regarding our public officers, regarding our agencies. I do not know why the Members have to take this approach, especially after I had explained what happened on Monday. I had clarified the facts on Monday. Why is it necessary for Mr Leong and Assoc Prof Lim to still want to throw our public officers under the bus? Why is that necessary, Sir?

Sir, I have explained earlier why MAS, when they received the capital reduction plan, needed time to assess, and this was only in mid of July. The officers needed time to go through this plan and because they were not aware of the undertakings and the details of MCCY's exemption that was given earlier. The exemption was gazetted, but the details and the conditions and the undertakings, those were not made public. So, I do not think it is fair for Mr Leong to expect that the MAS team would automatically know what those details are, when those details are not made public.

It was only after we had a fuller understanding of the set of issues after the 6 August Parliament Sitting that the MAS team saw that there could be a connection to what MCCY was looking at. And then they surfaced this to the Board and then we shared it with MCCY.

So, I hope that Mr Leong and Assoc Prof Lim could give our officers some credit, could understand what they were going through and also look at it from their perspective, from their point of view. They were not trying to do something wrong or, as Assoc Prof Lim mentioned, "to lead to multiple breakdowns of communications", or "to work in a siloed manner". That is certainly not what they were trying to do. They were trying their very best to do their work. And when they saw that there was a link, they shared the information. They surfaced it to the Board and then we shared the information with MCCY.

And this is how the Government then came together, across different parts of the Government, taking a whole-of-Government approach, coming to Parliament with this Bill, to seek Parliament's approval. This is the outcome of a whole-of-Government effort.

Mr Leong asked who should be in charge? Should the Cabinet not be in charge? I would like to ask Mr Leong, who do you think made the decision to take this Bill to Parliament, to come to Parliament? It is the Cabinet that decided that we could not allow the deal, in its current form, to proceed and that is why we are bringing this Bill to Parliament for approval.

Mr Deputy Speaker, I would also like to address two other points that Assoc Prof Lim mentioned in his speech earlier. First, he talked about SIRA, or the Significant Investments Review Act. Sir, we have explained this previously – I think Mr Saktiandi mentioned it earlier in his speech – that the purpose of SIRA is to look at Singapore's national security interests. And we will look at whether an entity is a key provider of security-related functions, especially when there are a few or no alternatives and whether it is adequately covered by existing sectorial legislation.

So, there is a rigorous process to decide what goes into SIRA and I hope Assoc Prof Jamus Lim understands that if we are too quick to put many entities under SIRA, that will go against what many other Members have spoken about earlier, that how then do you maintain investor confidence and have a pro-business operating environment? So, we must have a good basis, a good reason, before we decide that something needs to be designated under SIRA.

Assoc Prof Lim was also incorrect to point out that there are no controls if companies, like DBS and Singtel, were to sell their shares. I would urge Assoc Prof Lim to check his facts. MAS would have to approve any changes in significant shareholding for banks, including DBS, and IMDA would have to approve any changes in significant shareholding for telcos like Singtel.

Mr Deputy Speaker, Mr Saktiandi Supaat, Mr Yip Hong Weng, Mr Raj Joshua Thomas and Ms Usha Chandradas sought clarifications on the parameters of the proposed Bill. Mr Saktiandi and Mr Raj Joshua Thomas and, I believe, also Ms He Ting Ru, asked if the Bill only operates prospectively instead of retrospectively and if there would be any issues of retrospective application of the law.

Sir, the Bill does not affect any completed transaction and I would like to clarify that there is no formal application yet by Allianz to obtain effective control and become a substantial shareholder of Income. The contractual terms of the transaction clearly state that it is subject to regulatory approval by MAS. There is, therefore, no retrospective application of the law.

Mr Saktiandi, Ms He Ting Ru, Ms Hazel Poa and Ms Usha asked if the existing sections 26 and 27 of the Insurance Act would already allow whole-of-Government considerations to be taken into account, since the sections provide that MAS may approve an application, if the Authority is satisfied that the criteria are met.

To clarify, MAS takes into account all relevant considerations within the objects of the Insurance Act. There is currently no explicit provision under the Insurance Act for MAS to take into account the views of MCCY, which include questions relating to social mission, in assessing a proposed acquisition of an insurer with co-operative links. The proposed amendment will provide for that. MAS did not expand the scope of sections 26 and 27, as MCCY's views would not be relevant for insurers that are not linked to co-operatives.

And this is important, going back to the earlier point that Mr Mark Lee, Mr Neil Parekh and a few others mentioned, which is, we need to make sure that we still keep our operating environment one that is business-friendly and that investors will have confidence to continue to want to invest in Singapore. I think that is important and that is why we wanted to scope it tightly for this purpose and not have a general clause.

Ms Usha Chandradas also sought clarification on the interpretation of "conduct its business prudently" in the context of Income. Sir, this entails whether such an insurer will continue to be run in a safe and sound manner and safeguard policy-holder interests, consistent with MAS' prudential considerations under the Insurance Act.

To Mr Saktiandi's question on whether there should be a comprehensive summary of various classes and target companies, we do not think it is necessary. The current case involving Income is unique due to its co-operative history and social mission, setting it apart from typical insurers. For standard scenarios, the Insurance Act already clearly outlines the specific regulatory approvals required for such transactions.

Mr Liang Eng Hwa asked whether the proposed capital optimisation measures would weaken the capital adequacy of Income. I would like to first assure Members that MAS requires insurers to maintain, on an ongoing basis, adequate capital to address the risk of its insurance business and activities. As the capital required will increase as business risks increase, insurers may undertake capital optimisation measures, such as reinsurance to reduce the risk retained within the insurer, without shrinking its business or weakening it. This would, then, reduce the regulatory capital required to support the same business.

These measures that free up capital to be returned to shareholders is not an uncommon commercial practice, as Mr Liang has pointed out. And to be clear, in the case of Allianz, they had provided a preliminary business plan to MAS in mid-July regarding the capital reduction. There was no application from Allianz for capital reduction.

Mr Deputy Speaker, I would also like to address a comment that Mr Leong Mun Wai made earlier with regard to the capital reduction plan.

First, I think I have clarified that there was no application from Allianz. They only provided a preliminary business plan to MAS in mid-July. I also clarified on Monday and also today and a few Members have mentioned it as well, that the deal is still subject to MAS regulatory approval. I hope those facts are clear.

I do have an issue with how Mr Leong has described the capital reduction plan as an asset stripping exercise. And I do not think that is a fair description. I think Mr Leong deliberately chose that term and this is not the first time I have heard Mr Leong make unkind remarks towards NTUC.

Sir, NTUC has explained, the Members heard from Senior Minister of State Desmond Tan earlier and also other colleagues from the Labour Movement, that they are entering into this deal with the right intent. They acted in good faith. They wanted to do the right thing. They wanted to strengthen Income, so that Income is in a stronger position to serve its policy-holders and also to fulfil its social mission, because to do good, you must first do well. That was the intent.

We may have differences in views, as Minister Edwin Tong mentioned earlier, with regard to this deal, whether this deal is something that the Government would allow to proceed and we have come to the conclusion that we would not allow this deal to proceed. So, yes, there is a difference in views between what NTUC, NE, Income have put up and what the Government feels is the right way forward, but we do not disagree with the objectives of why we are doing this or why Income is doing this. The purpose of doing this is the right one. It is to strengthen Income and to do well, so that it can do good.

The Members of the Opposition often remind us that just because there are differences in views, it does not mean that we should automatically jump to the conclusion that you have a bad intention. I respect that view, Sir, so I would like to seek their agreement that, in this case, please also apply that consistently; that just because there is a difference in views, in terms of how the proposal is structured, it does not mean that you should conclude that NTUC and NE were doing this without a good intent. That would not be fair to our sisters and brothers from NTUC and NE. [Applause.]

Sir, Minister Edwin Tong has explained why we need this Bill, to give the Government the powers so that our view will prevail. And we do not want the deal in its current form to go through. However, we remain open to Income entering into a new deal, whether with Allianz or with another entity, if the outcome is that this can help to strengthen Income.

Mr Deputy Speaker, this Bill is being tabled and read on a Certificate of Urgency because the proposed deal by Allianz is under active consideration by Income's shareholders. The Bill will allow the Minister-in-charge of MAS to consider the views of the Minister charged with the responsibility of the CSA in applications to obtain effective control or become a substantial shareholder of a licensed insurer that is a co-op, has acquired the business of a co-op or has a substantial shareholder or effective controller that is a co-operative. The Minister-in-charge of MAS can then withhold approval if he considers it in the public interest to do so. The Minister-in-charge of MAS will also take into account prudential considerations under the Insurance Act in making his decision.

The Government has determined that this proposed transaction cannot proceed in its current form. However, we remain supportive of NE's and Income's efforts to look for a strong partner, including with Allianz or another entity, to strengthen Income's capital base and market position. The Government recognises and agrees that Income must do well before it is able to continue doing good on a sustained basis.

Mr Deputy Speaker, I thank Members, once again, for their support for the Bill. I hope I have clarified the concerns raised by Assoc Prof Jamus Lim and Ms He Ting Ru, and I sincerely hope that the WP can support this Bill. [Applause.]

Mr Deputy Speaker: We have had a thorough debate. We have had 19 speakers and the debate has lasted over three hours. Minister Chee Hong Tat, Minister Edwin Tong and Senior Minister of State Desmond Tan have responded, to all, if not the majority of the questions raised.

Be that as it may, given the urgency of this Bill and it being read the Second and Third time today, I will allow clarifications, but I seek the understanding of Members to keep the clarifications succinct and clear; and that be reciprocated by the front bench in targeted and accurate responses. So, I will do my best to allow as much clarification time as I am able to. Any clarifications? Assoc Prof Jamus Lim.

6.56 pm

Assoc Prof Jamus Jerome Lim: Thank you, Deputy Speaker. Let me start by stating unequivocally that I have deep respect for the hard work that our civil servants put in, often involving long hours and comparatively lower pay than they could have commanded in the private sector. But I feel that it is nevertheless imperative for me to highlight instances where the system that the civil service operates under, which is, to be clear, overseen by this Government, is problematic because our civil servants can only do the best they can within the constraints that they face from the Government of the day.

So, once again, to reiterate, I am critiquing the system, not the civil servants. I do not think it is useful to bring in the civil servants as pawns to a political argument.

To further clarify, I did not say that there are no protections for the sale of significant assets, like Singtel or DBS, but that additional protections are granted by SIRA. Accepting that we do not wish to list every possible Singapore firm under SIRA, I still have not heard a satisfactory reason as to why the designated entities are limited to only those within the military, industrial complex, whereas our Total Defence pillars clearly go into financial and digital elements.

Let me put this another way. Could I confirm with the Minister that this Government will never consider listing assets, such as DBS or Singtel, under SIRA?

6.58 pm

Mr Chee Hong Tat: Mr Deputy Speaker, I would like to start by first requesting Assoc Prof Jamus Lim not to put words into my mouth. I did not refer to our public officers as pawns and I do not think he should too. We have deep respect for our public officers. We know that they work hard, they do their work well and it was not so clear earlier when Assoc Prof Lim was making all the criticisms of working in silos and having breakdowns of communications, that he was referring to the system.

If his concern is about the system, I have also explained on Monday and earlier, what happened and why it was not in the ordinary course of operations for MAS, when they are assessing information from a financial institution, to share that with another Government agency. If Assoc Prof Lim considers that as a failure, a systems failure, then I presume, maybe he could let me know what his counterproposal is.

Is he then suggesting – and I am not trying to put words in his mouth, I am only asking – that anytime MAS receives information, whether there is a reason or not, we should then share it with all other Government agencies? I hope that is not what Assoc Prof Lim is proposing. I think that will have an impact on investor confidence and it will affect our pro-business operating environment.

So, I have explained what happened with this particular case and I have also reiterated the chronology of what happened. I hope Assoc Prof Lim can accept that account of what happened and not keep repeating unfounded allegations about the public service officers in our system facing constraints from the Government of the day when it comes to sharing of information. I do not think there is any evidence, unless Assoc Prof Lim can produce evidence; otherwise, I would like him to please withdraw that rather serious allegation.

With regard to SIRA, I have already explained earlier that this has to do with national security and I also mentioned in my reply that we will also look at whether there are other Acts that cover some of these entities; and if there are, then there is no need to replicate this with SIRA.

So, the two examples that Assoc Prof Lim kept raising, DBS and Singtel, I have already explained that there are sectoral regulators – in the case of DBS, it will be MAS; in the case of Singtel, it will be IMDA – that would play the role of the gatekeeper. And if you want to acquire shares in DBS or in Singtel that goes beyond a certain percentage, you do need the regulator's approval before you are allowed to do so. So, in a way that is already covered.

Mr Deputy Speaker: Minister Edwin Tong, anything to add? No. Mr Leong Mun Wai. Succinct and straightforward, please. No, I have called you.

Mr Leong Mun Wai: Thank you, Deputy Speaker. Allow me to do two responses to what the Minister had directed towards me during his speech. My first point is also about civil servants, something similar to what Member Assoc Prof Jamus Lim had just said. Today, I have not said anything about civil servants. What I have said is, I would like to acknowledge the effort put in by MCCY and MAS to scrutinise the transaction and come up with this Bill. So, this is an appreciation of the work done by MCCY and MAS.

But I have directed at the Ministers — it is the responsibility of the Cabinet Minister to ensure that they are appraised of all relevant and important information, and to consider them fully before making decisions and public pronouncements. I am saying that because on 6 August, we spent more than one hour clarifying during Question Time about this whole deal without complete information. So, we are running parallel all the time and you can also say that it was quite a waste of time. But what happened now is that now, with more information, we know that the Ministers and the NTUC CC, actually, they do not have the information on the capital reduction. So, we understand that point.

But still, we are concerned about the coordination and how things are being presented before the information is complete. So, that is one point. I want to respond to the Minister when he said that I am bringing in the civil servants and all that, a point that is similar to what Assoc Pro Jamus Lim has said.

The second point that the Minister has said is about my characterising the exercise as asset stripping. In finance, nobody with some knowledge about finance would disagree with me. It is a fact. It has nothing to do with the intent. You can intend. Your intentions can be good. But the plan that you put up, is actually not so good. You can even say detrimental. That is why the Government now is coming back after more work and saying, "Oh, this plan cannot go through". The plan is not a good plan, from the point of view of continuing with the social mission.

And I have got one more point to raise afterwards. It is that it is also not a plan that provides enough protection to policy-holders. I, myself, am a policy-holder. So, it is not fair for the Minister to say that I am trying to characterise the deal in bad light. I am just stating the fact. Anyone with basic financial knowledge would not disagree with me. This is an asset stripping exercise.

Mr Chee Hong Tat: Mr Deputy Speaker, I was quite dismayed to hear Mr Leong Mun Wai describe the 6 August discussion in Parliament as, in his words, "a waste of time". It provided the opportunity for Members to ask questions, and for MCCY and MAS to clarify what is the status of the situation at that time; and then, to hear the concerns of the Members. I think it is not correct and I hope Mr Leong could withdraw that comment too, to describe that process as a waste of time.

The point about whether information should be made known during a discussion, I had clarified repeatedly that when we came to Parliament on 6 August, both Minister of State Alvin Tan and I made it clear that there was no regulatory approval given to the deal. It is something that is still being evaluated, considered and, therefore, in response to Mr Leong's point about how before we make any decision or pronouncement, we should have the full set of information. Indeed, that is why, after the 6 August Sitting, when MCCY received the information from MAS, the agencies then got together, the Ministers then got together and discussed, and eventually, Cabinet made a decision to bring this Bill to Parliament. This is the decision that we are seeking approval from Parliament.

So, I do not think there is any departure from what Mr Leong described as what he expects the Government to do. But on 6 August, there were Parliamentary Questions filed. Unless Mr Leong is suggesting that we do not answer Parliamentary Questions? If not, at that point in time, because the deal is still being considered, no approval was given yet, I think it was only correct that we gave replies based on information that we had at that point in time. But because there was no regulatory approval given, there was no decision or pronouncement by the Government.

The second point that Mr Leong raised, Mr Deputy Speaker – I find it quite odd that Mr Leong on one hand would say he is not trying to characterise it negatively and, on the other hand, he has made it quite clear that this is a bad deal.

We have explained why the capital reduction plan on its own would not be something that is uncommon. An entity, whether Income or another insurer, another financial institution, to do capital optimisation, I think Minister Edwin Tong explained this, I explained this as well and Mr Leong, I am sure, understands. Financial optimisation is something that entities, companies do regularly. So, this, by itself, is not wrong.

When MAS was looking at this initially, they were looking at it from a prudential point of view to see – if you do this, would Income still have the necessary capital to meet its capital adequacy ratio? From a prudential point of view, is this something that we would be prepared to consider?

But as I mentioned earlier in my closing speech, there was no application by Allianz on the capital reduction. They only submitted a preliminary business plan in mid-July. So, I would like to suggest that, perhaps, it is not very useful and productive for us to argue about different adjectives being used. But as Ms Hazel Poa said earlier, we let the public decide which phrase was used by Mr Leong and which phrase was used by me to describe this exercise. And the Hansard will reflect that Mr Leong did, indeed, say it is an asset stripping exercise.

Mr Deputy Speaker: Mr Ong Hua Han. Go ahead.

Mr Ong Hua Han: For Minister Edwin Tong, it has been a long day so I apologise if I failed to hear this in his response. I do understand that the factors were being looked at cumulatively. But referencing my speech, can the Minister clarify whether the lack of clear binding provisions or structural protection around Income's social mission alone is sufficient reason to merit the blocking of this deal?

Mr Edwin Tong Chun Fai: Thank you, Mr Ong. I had mentioned a series of factors that we looked at, one of which is the lack of structural protection. So, this is taken in the context of the suite of terms as well as the circumstances in which the capital reduction was done and the amount, were cumulatively the factors that we took into account, not any one single factor on its own.

Mr Deputy Speaker: Ms Sylvia Lim.

Ms Sylvia Lim (Aljunied): Thank you, Deputy Speaker. I have two clarifications. First, I do not seem to recall either of the Ministers clarifying the questions raised by Ms He Ting Ru and Ms Hazel Poa about whether MAS needs this Bill. In other words, does MAS not have sufficient power within its current jurisdiction to take into account the public interest in having affordable financial products and, therefore, is this Bill really necessary? I do not recall either Minister touching on this point.

[Deputy Speaker (Ms Jessica Tan Soon Neo) in the Chair]

Second, as a clarification for Minister Chee Hong Tat, would he at least acknowledge that what Parliament is being asked to do today is to pass this legislation that is targeted at a live transaction, a particular one, to introduce a legislative change that would affect that live transaction? And does he not acknowledge that this sends a very bad signal to the business community about business certainty?

Mr Chee Hong Tat: Mdm Deputy Speaker, I had actually covered both points in my closing speech earlier. But Ms Sylvia Lim may have missed it. So, with your permission, Madam, can I just read those sections again?

Mdm Deputy Speaker: Please proceed.

Mr Chee Hong Tat: Thank you. So, this is what I said earlier, that the Bill does not affect any completed transaction because there is no formal application yet by Allianz to obtain effective control and become a substantial shareholder of Income. And, therefore, there is no retrospective application of the law. So, that is what I have said. There is no formal application yet by Allianz.

Second, the point about why MAS does not have the powers, I have also explained this, that in the existing sections 26 and 27 of the Insurance Act, there is not an explicit provision under the Insurance Act for MAS to take into account the views of MCCY, which will include questions relating to social mission in assessing a proposed acquisition of an insurer with co-operative links.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]

So, we cannot rely on the existing provisions without this set of amendments. And because it is a proposal that is under consideration by shareholders, there is urgency. So, yes, we do not disagree that there is a deal that is being considered. But it is a fact, Sir, that there is no formal application by Allianz to MAS.

Mr Deputy Speaker: Ms Hazel Poa.

Ms Hazel Poa: I thank Minister Chee Hong Tat for his reply on sections 26 and 27. I agree that there are no specific provisions at the moment to take into account MCCY's views, but at the same time, the existing legislation does not prohibit MAS from taking into account those views. It is actually left open. So, why are sections 26 and 27 not sufficient?

My second clarification is referring to Minister Edwin Tong's reply that the capital resilience can be improved by re-insuring. My point was that the reason for this sale of Income Insurance was presented as the need to improve capital resilience. But if the capital resilience is actually improved through re-insurance, then it has nothing to do with this acquisition by Allianz. So, why is that presented as the reason?

Mr Chee Hong Tat: Mr Deputy Speaker, I thank Ms Hazel Poa for acknowledging my explanation that there is no explicit provision under the Insurance Act for MAS to take into account the views of MCCY relating to social mission.

Sir, if we depart from what MAS has been doing all these years as a prudential regulator under sections 26 and 27, where we assess applications from financial institutions, to suddenly say that we now will take into account social mission because we interpret this very broadly. First, that itself could lead to more uncertainty for the industry players because they will be wondering, the next time, would you then change the interpretation to something else again without being clear about the reasons why you are doing it and being transparent about how you are doing it.

That is why, as Ms Jessica Tan mentioned earlier, we prefer to take a more open and transparent approach of coming to Parliament to seek Parliament's approval for this change, to address the concerns that we have but to do so in a tightly-scoped manner so that the rest of the industry who are not co-operatives or who have no links to co-operatives need not worry that this new provision taking into account social mission will also apply to them.

Mr Deputy Speaker: Ms He Ting Ru. Oh, Minister Edwin Tong, do you want to add to Minister Chee's reply?

Mr Edwin Tong Chun Fai: Yes, I was going to respond to Ms Hazel Poa's second question. Again, as I said just now, I am not able to and I am not going to speak on behalf of Income. But the Member did make a point and she suggested in her speech that the statement, which I got her to confirm earlier, that capital resiliency following the transaction was misleading. That is the point I was trying to make. Earlier on, we agreed that that is the reference that the Member was making in paragraph 7.

So, the point really is this, Ms Poa. The transaction is contemplated between an insurer, Income; and another insurer, Allianz. It is also proposed that following the transaction, the plan was to optimise capital. One of the ways in which it was going to be done was to re-insure a portion or a portfolio of Income's risk.

Taken together, the statement, therefore, that after the transaction is carried out, its capital resiliency would be improved is, in my view, not misleading. That was the explanation I gave to the Member. I also explained to the Member that we could improve capital resiliency in a number of different ways such that even after capital reduction, we could still have an adequate capital adequacy ratio.

Mr Deputy Speaker: Ms He Ting Ru.

Ms He Ting Ru: Thank you, Sir. I have two clarifications for the Minister-in-charge of MAS and one clarification for the Minister for MCCY.

In relation to my clarification for the Minister-in-charge of MAS, I think the Minister mentioned twice that there was no formal application made by Allianz in relation to this proposed acquisition of the majority stake in Income. I just wanted to ask some clarification because in the proposed new section 33A of the Act, in subsection 9, it states, and I quoted this in my speech actually, "This section applies also to a relevant application received by the authority before the date of commencement of the Insurance Amendment Act 2024 that is still pending as of that date." Can the Minister clarify whether this refers to this transaction or another transaction? That is my first clarification.

My second clarification relates to the points I made about why the urgency of this Bill, such that within three days, this needs to be passed, going through a Second and Third Reading. The question here is that the Minister mentioned earlier the reason why we are rushing through this Bill under a Certificate of Urgency is because this deal is under active consideration by shareholders.

From my understanding of this, shareholders can vote however they want, they can consider however they want. But honestly, the offer is ultimately subject to regulatory approval and this is why it is called a pre-conditional offer on the offer document. I am just wondering, I also mentioned in my speech, given that the long-stop date is nine months from the date of announcement, why is there this rush to do this? That is my second clarification.

My clarification for the Minister for MCCY is in relation to the exemption granted to the 2023 gazetted Exemption Order. I believe the Minister mentioned that there is some flexibility needed to allow the use of the surplus to achieve the mission. I just wanted the Minister to clarify that no conditions were imposed on the use of the surplus in that respect.

Mr Edwin Tong Chun Fai: I had answered Ms He's question and when I used the word flexible. It was in the context of my answer to Mr Keith Chua's query about the extent to which social mission might evolve. That was when I used the word flexible. But in the context of the exemption, there was a series of discussions. I mentioned in my speech on Monday that we engaged with Income over a period of time. We exchanged views. They sent various letters representing their position. It was on this basis that the corporatisation and the exemption was granted.

Mr Chee Hong Tat: Mr Deputy Speaker, I would like to confirm that there is no formal application from Allianz to MAS. The provision that Ms He mentioned, that is inserted more for avoidance of doubt.

The second point that Ms He raised, this Bill is urgent. We need a Certificate of Urgency because the deal is under consideration by shareholders. So, to have a long period between the First Reading and the Second Reading before the amended law takes effect, will actually give rise to more uncertainty in the market and for the parties concerned. That is why we are putting forth this Bill for Parliament's consideration and for approval.

Mr Deputy Speaker: We are at the three-and-a-half-hour mark. We started this debate at 3.50 pm. It is now coming to 7.25 pm. I see the hands are really hands of Members who have already asked questions. I will allow there to be a second round of clarifications.

Just to confirm, I see the hands of Ms He Ting Ru, Ms Hazel Poa, Assoc Prof Jamus Lim and Mr Leong Mun Wai. Are there any more clarifications beyond these hon Members?

None. So, I invite the four hon Members to keep their clarifications succinct and clear. We will start with Ms He Ting Ru, followed by Assoc Prof Jamus Lim, Mr Leong Mun Wai and then Ms Hazel Poa.

Ms He Ting Ru: Thank you, Sir. I am still a bit confused because, as I mentioned earlier, the deal is a pre-conditional offer. It is always subject to regulatory approval. Again, the shareholders can consider that. We have a nine-month-long stop-date. I do not really understand why the Minister is saying that, given that it is under consideration by the shareholders, we have to rush through. Because shareholders know that regulatory approvals take a certain amount of time and they know that all these are actually being debated and then the amendments are being proposed. I am not entirely sure that the two are necessarily connected.

Mr Chee Hong Tat: Mr Deputy Speaker, I have already explained the reasons from the Government's point of view. I accept that Ms He Ting Ru may have a different view, but I have explained why we want to provide greater certainty on the decision and on the changes to the legislation for the different stakeholders, including the shareholders but also other parties who are involved in this deal. That is the reason why we are doing it with a Certificate of Urgency, but, it is, of course, subject to Parliament's approval.

Mr Deputy Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Thank you, Deputy Speaker, for your indulgence. I do not plan to prolong this, but Minister Chee Hong Tat had requested that I withdraw an allegation, if I am correct, that there was a communication breakdown between different arms of the Civil Service. I am happy to make this withdrawal, but I am a little puzzled because it is actually in his words that there was an information gap, this was presented on Monday, between MAS and MCCY. I understand I characterised this as a communication breakdown instead, but perhaps Minister Chee Hong Tat is triggered by the word "breakdown". Again, I am happy to withdraw the statement if he thinks it is a matter of terminology.

The second point is that he had asked me to make a suggestion and I did so in my speech, for how I think we should go forward. This is the constructive part and that is that future transactions of such strategic importance should at the outset involve the establishment of a multi-Ministry task force.

Mr Chee Hong Tat: Mr Deputy Speaker, I also do not want to prolong this debate, but just to clarify, I was not asking Assoc Prof Jamus Lim to withdraw his comment about the communication breakdown. He is entitled to use that phrase if he prefers to. I was referring to his comment that the public officers are unable to share information due to constraints imposed by the government of the day.

That was what I would like to request that Assoc Prof Lim to withdraw, that comment, because that is not true. We do not put barriers to prevent our public service officers to share information. In fact, in this case, the decision to share information was proposed by the public officers and supported by the political office holders on the MAS Board.

Mr Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Deputy Speaker, Sir, I have two questions for the Minister. One is that he did not quite answer what I have asked in the speech. Did the Government or MCCY make an effort to ask Allianz whether there is a way that this deal can be aborted without us having to come and debate a new law and introduce a new law for this? That is maybe one way of doing it.

Well, I heard some laughter in the Chamber, but this is very common. I am in the finance industry for a long time. If the regulator comes to you and says, "I think, your deal, maybe you can consider this and that." Then, there will be negotiation going on. So, that should be something — If you did not do anything on that, then it is okay. I am just seeking an answer whether you did ask Allianz for that.

Secondly, and it is a wish on the part of policy-holders – and I have repeated many times that I myself am an Income policy-holder – we have supported Income all these years. There is a lot of trust because Income is a company that is under the NTUC and we Singaporeans have a lot of trust in Income.

Over the years, because of our support, there is a lot of surpluses built up in terms of the policies, in the policy funds they are accruing to the policy-holders. So, can I ask the Minister whether the Government can do something to remind NTUC that in the future, when they sell the company, if they have a new deal, their social responsibility will also cover their responsibility to the policy-holders. It is not just the responsibility of the social mission that the Government is talking about.

Because it really worries me that you get an acquiror, potentially, and I am not referring to anybody that comes in and what they are interested in is capital restructuring. When you restructure the capital, you go and find all kinds of surpluses in the company, you know. And another surplus that an insurance company potentially has is in the policy fund of the policy-holders.

What I am saying is that I was wondering whether I can get assurance from the Minister that this message will be passed on to NTUC.

Mr Chee Hong Tat: Mr Deputy Speaker, I will address the first question that Mr Leong raised. I have explained earlier that we have engaged Allianz and what their response is. Along the way, because they were submitting business plans, there were certainly discussions between MAS and Allianz on what they have submitted.

I do want to make a point, Mr Deputy Speaker, that the Government, when it comes to dealing with our licensees and with industry players, we would like to take the approach of being open and transparent, and that if we have concerns with the deal, we have our reasons, we would rather do it in a manner like what we are doing now, come to Parliament with the proposed Bill, explain why we are doing it, rather than — and I hope that is not what Mr Leong is suggesting, because to go to the company and say, as a regulator, "I don't think you should be doing this and I think you should be backing off."

I think if you do that, you may actually send more uncertainty and create more worries in the industry. Mr Leong is shaking his head. I do not know whether that means he agrees with me that that is not what we should do, or he thinks that that is what we should do. If he thinks that that is what we should do, then I would say that we have to disagree, because we believe that as the regulator, to uphold the reputation of our regulatory system and the transparency of our financial sector, to be able to continue to attract investors, as what several Members had spoken about, I think it is important that we deal with our licensees in a manner which is above board and that they understand.

So, if you look at the reaction from Allianz, they said they understood the Government's decision and I think that is important because we want to continue to be a place that foreign investors, companies want to come to, create more good jobs for our people. I think that is important.

Mr Deputy Speaker: Minister Edwin Tong

Mr Edwin Tong: Mr Leong, I said earlier that it is not for us to tell Income or indeed any party what to do and how to run their business. You also mentioned that as a policy-holder yourself and you sort of conflated that point with surpluses, and suggested that there might be some risk to the surpluses, these are all subject to capital adequacy ratios that Income is complying with, and in fact, they will be required to comply with. So, from that perspective, I think you do not have to worry.

Mr Deputy Speaker: Ms Hazel Poa

Ms Hazel Poa: I would just like to clarify that my point was not that the capital resilience after the sale is misleading. If I misunderstood the Minister earlier, I apologise.

My point has always been that presenting improving capital resilience as the reason for the sale is misleading, because we now see that the capital resilience is improved through re-insurance, not through the sale to Allianz.

Mr Edwin Tong: I thank Ms Poa for clarifying, but I think when I first answered the Member's question, I quoted the Member, and I asked her whether that is what she meant and the Member said yes. So, that is how I answered her question.

But be that as it may, the point is, in this transaction, they were entering into a transaction with an insurer and had plans to re-insure part of their portfolio of risk. And so, the simple point really is, in that context, the statement that was made in the reference the Member gave, paragraph 7, is not misleading, because there will be improvement to capital resiliency after the transaction.

7.35 pm

Mr Deputy Speaker: I think we have respected the importance of this Bill through a close to four-hour debate. And I think it is timely to put the question to the House.

The question is, that the Bill be now read a Second time. As many as are of that opinion, say "Aye".

Hon Members said "Aye"

Mr Deputy Speaker: To the contrary say "No".

Ms Sylvia Lim: Mr Deputy Speaker, Members from the WP would like our abstention recorded.

Mr Deputy Speaker: Yes, I listened carefully to Ms He Ting Ru who, if I am not mistaken, said, "We need to register our abstention on this Bill." So, does that apply to just Ms He Ting Ru or all of WP?

Ms Sylvia Lim: The party, Sir.

Mr Deputy Speaker: Are you abstaining or are you objecting?

Ms Sylvia Lim: Abstaining.

Mr Deputy Speaker: Could you stand up, please, so that we can record your abstentions?

Hon Members Mr Chua Kheng Wee Louis, Mr Gerald Giam Yean Song, Ms He Ting Ru, Assoc Prof Jamus Jerome Lim, Ms Sylvia Lim, Mr Muhamad Faisal Bin Abdul Manap, Mr Dennis Tan Lip Fong rose in their place for their abstention to be recorded.

Mr Deputy Speaker: There are seven abstentions. Less those seven abstentions, everybody else has voted "Aye".

Ms Sylvia Lim: Thank you, Sir.

Mr Deputy Speaker: I declare that the "Ayes" have it, the "Ayes" have it.

Bill accordingly read a Second time.

7.36 pm

Mr Deputy Speaker: At this point, I wish to state my opinion that the Bill is a Hybrid Bill. Although the provisions of the Bill are drafted in general terms, it is clear from the Ministerial Statement by the Minister for Culture, Community and Youth on 14 October 2024 and from the Second Reading debate today, that the Bill is in substance, aimed at the proposed acquisition of the Income Insurance Limited by Allianz Europe BV.

Consequently, under the provisions of Standing Order No 68, the Bill should ordinarily after the Second Reading, be referred to a Select Committee. However, Standing Order 86 provides that notwithstanding the provisions of any Standing Order, when a Certificate of Urgency signed by the President of the Republic of Singapore, has been laid on the table, the Bill to which the Certificate relates, may be proceeded with throughout all its stages until such Bill has been read the Third time.

Standing Order No 86, therefore, takes an urgent Bill outside the ambit of Standing Order No 68. The Bill before the House today can therefore be committed to a Committee of the whole House, despite Standing Order No 68.

Therefore, I ask, Committee stage, what day?

Mr Chee Hong Tat: Now, Sir, I beg to move that Parliament will immediately resolve itself into a Committee on the Bill.

Question put, and agreed to.

The House immediately resolved itself into a Committee on the Bill. – [Mr Chee Hong Tat].

Bill considered in Committee and reported without amendment.

Mr Deputy Speaker: The question posed by the Minister is, that the Bill be now read a Third time. As many as are of that opinion, say "Aye".

Hon Members said "Aye".

Mr Deputy Speaker: To the contrary say "No".

Ms Sylvia Lim: Mr Deputy Speaker, again, the Members of the WP would like our abstention recorded.

Mr Deputy Speaker: So, you are abstaining and not objecting?

Ms Sylvia Lim: Abstaining.

Mr Deputy Speaker: Could I ask all those who are seeking to abstain to stand up in front of your seats?

Hon Members Mr Chua Kheng Wee Louis, Mr Gerald Giam Yean Song, Ms He Ting Ru, Assoc Prof Jamus Jerome Lim, Ms Sylvia Lim, Mr Muhamad Faisal Bin Abdul Manap, Mr Dennis Tan Lip Fong rose in their place for their abstention to be recorded.

Mr Deputy Speaker: There being seven abstentions, and notwithstanding the seven, everyone else in the Chamber has voted "Aye". I think the "Ayes" have it, the "Ayes" have it.

Bill read a Third time and passed.