Opening Remarks By The Minister For Finance, Dr Richard Hu At The New Singapore Shares Media Briefing At The Treasury, At 9am, Tuesday 16 October 2001

The New Singapore Shares Scheme was conceived by PM Goh as a new way of sharing Singapore's success with our citizens. It will supplement and not replace the CPF Top-Up scheme. It was first revealed by PM Goh at the National Day Rally speech and announced by DPM Lee in Parliament last Friday. This morning, we are releasing the full details of the scheme. Total cost of the scheme is $2.7 billion.

2 The NSS has two features which distinguishes it from the CPF Top-Up scheme. First, it allows part of the shares to be withdrawn in cash almost immediately. This feature is especially useful for persons who need some cash during this difficult period. The second is that the shares, if saved, will earn interest at a basic 3% and more if the economy does well. The NSS provides investment returns tied to our GDP growth via the dividends declared. There is a guaranteed minimum of 3% per annum, which is higher than fixed deposit rates offered by banks today. This means that NSS holders will benefit most if they hold on to their shares until 2007. On top of that, extra dividends will be declared yearly, equal to the real GDP growth rate (if positive) of the previous calendar year. Both the NSS and dividends are exempt from tax.

3 Those who qualify will receive a basic package of 200 to 1400 New Singapore Shares, depending on their income for those who are employed, and on their housing type for those who are not employed. The self-employed will receive according to their housing type, unless they qualify for less according to their income level. There are five bands - about 21% will be getting the largest basic amount of 1400 shares, 25% the second largest of 1000 shares, 23% getting 600 shares, 12% getting 400 shares and 19% getting 200 shares. Extra shares are given to those who have served NS ? 200 additional NSS for Active NSmen and 100 for Inactive NSmen. Another extra 200 shares are also given to those who have reached the retirement age of 62 years old. All in, qualifying Singaporeans will be allotted 200 to 1700 shares each.

4 Everyone who is already getting the ongoing 2000/2001 CPF Top-up (which will next be paid on 1 December 2001) automatically qualifies for the NSS. Those who do not qualify for the CPF Top-up can still get the NSS if they contribute at least $50 in their CPF Account between 1 January and 31 December this year. Depending on when the $50 contribution is made, the NSS will be credited on 1 November 2001, 1 December 2001, or 15 January 2002. But no matter when the NSS is credited, dividends will be calculated from 1 November 2001, with the first dividend paid on 1 March 2002, and subsequent dividends at one year intervals until the maturity of the scheme on 1 March 2007.

5 Unlike CPF Top-ups which can be withdrawn only under CPF rules, the NSS can be exchanged for cash at any time. There are no conditions to exchanging the NSS for cash, other than a 50% limit for the first year before 1 November next year, and a minimum withdrawal of $200 each time. After 1 November 2002, NSS holders can exchange 100% of their holdings for cash at any time, although they should do this only if they need the cash, because the dividend rates are very attractive compared to bank deposit rates.

6 The fastest and most convenient way to get cash from any NSS exchange is to request for direct bank credit through the Internet or CPF PAL Phone. How long it takes to process the application will depend on how large is the number of people applying at the same time. The maximum processing time will be two weeks if the NSS holder gives his bank account number to the CPF Board for direct credit to his bank account. It will be three weeks if the NSS holder does not declare his bank account and a cheque has to be mailed to him. Special arrangements have been made for the first possible payment to be on 2 November 2001, for those in a hurry to exchange their NSS for cash.

7 The NSS is only one of the measures in the off-budget package designed to particularly help the lower income, who will benefit less from the tax rebates. We have given you typical cases of low, middle and high income households, showing the combined impact of NSS and the other off-budget measures on their finances. We have similarly included typical cases for SMEs and big corporations.

8 My Ministry officers and the CPF Board will now provide you the details on the NSS. Thank you.