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Second Reading Speech by Mr Tharman Shanmugaratnam, Second Minister for Finance on the Financial Procedure (Amendment) Bill 2007, at The Parliament, 22 May 2007

22 May 2007

1. Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

2. The Financial Procedure (Amendment) Bill before the House seeks to amend section 7 (3) of the Financial Procedure Act to remove the need for the President to determine or authorise the investment of public moneys in securities or other instruments. The Minister for Finance, instead of the President, would determine or authorise the type of securities or other instruments in which public moneys may be invested. This amendment covers Government's investments managed by GIC. MAS has made similar amendments to the MAS and Currency Acts, which were passed in Parliament on 12 Feb 07, such that the MAS Board instead of the President would now approve investments in new securities and instruments for MAS' investments.

3. The rationale for this amendment is that the responsibility for approving categories of investments is an executive function that appropriately resides with the Government, instead of with the President. Investment risks are better assessed and managed by Government and its investment agencies, since risk management is part and parcel of regular investment decisions and operations.

4. As such, the proposed amendment recognises that the role of the President is in the overall safeguarding and protection of past reserves rather than in approving specific categories of investments and assessing the risks involved in each category or type of security. The President also approves the Board and CEO appointments of our key investment agencies, which include GIC Pte Ltd. The Government will also continue to report investment performance on past reserves regularly to the President.

5. The President has been consulted and agrees with the above amendments.

6. Sir, I beg to move.