MOF – geraldgiam.sg

Budget 2026

Budget Debate speech 2026
Gerald Giam (Aljunied GRC)
24 Feb 2026

Mr Speaker, the 2026 Budget Statement arrives at a moment of profound transformation. Globally, we are navigating tectonic shifts in security, trade and technology, while domestically, our workforce is feeling the weight of disruption alongside continuing cost-of-living pressures.

The Prime Minister describes our current fiscal position as “fortunate”, citing a revised FY2025 overall fiscal position that has resulted in a surplus of $15.1 billion. This is attributed largely to the front-loading of investments and a significant revenue surge.

Two-speed Economy

Yet, for many Singaporeans and local small businesses, this success feels distant. More than 2,400 retail food establishments closed last year; youths under 30 are experiencing unemployment rates almost double the national average. As the Association of Small and Medium Enterprises (ASME) highlighted, we are witnessing a “two-speed economy”. Despite positive aggregate macroeconomic data, local SMEs find themselves squeezed by a perfect storm of rising operating costs and weaker domestic demand.

ASME pointed to a productivity and contribution imbalance: Large enterprises contribute 74% of the nation’s nominal value-added, even though they employ just 30% of the national workforce. In contrast, micro and small enterprises contribute only 11% of the value-added, despite employing 45% of the national workforce.

This reveals a staggering labour productivity gap. Since wage growth is only sustainable when backed by productivity, when micro and small enterprises are stuck in a low-productivity “second speed”, it becomes supremely challenging for them to offer the competitive salaries needed to combat the rising cost of living.

Furthermore, as we look toward a future shaped by rapid AI integration and automation, we must confront the risk of structural “jobless growth”, where corporate profits and GDP continue to grow much faster than the labour market.

We must put our huge fiscal surpluses to use to support and empower the workers and sectors that find themselves stuck in the slow-growth track. It is only by doing so that we can secure the necessary social licence for continued high-growth strategies in elite sectors. When the average Singaporean sees tangible, structural benefits from these outsized gains rather than rising inequality, it fosters the public trust and political consensus required to maintain our open and competitive economic model.

Fiscal Projections and the GST Hike

The House should examine the government’s recurring pattern of overly conservative fiscal projections. The revised FY2025 surplus of $15.1 billion is more than double the original estimate of $6.81 billion. This $8.29 billion discrepancy is not an isolated incident; it is part of a trend where projected deficits regularly transform into healthy surpluses. While the government points to the volatility of tax revenue, this consistent under-estimation raises a fundamental question of whether the government is unnecessarily hoarding funds. We need more accurate forecasting that ensures our nation’s abundance benefits current generations as much as future ones.

This fiscal abundance also raises questions about the government’s tax strategy. With surpluses of well over a billion dollars in all but one of the last five years, totalling over $22 billion, we should re-evaluate the necessity of the GST hike.

The government said that the GST hike was meant to fund increased healthcare spending in an ageing society. But the Ministry of Health’s revised FY2025 operating expenditure was $305 million lower than estimated, mainly due to lower-than-projected funding needs for public healthcare institutions. Will the government be revising its projections for future increases in healthcare expenditure?

True prudence is not just about amassing vast fiscal buffers; it is about balancing future security with the current needs of our people. Unnecessary taxation drains liquidity from households up front, creating a dependency on government handouts rather than fostering genuine financial independence. Furthermore, it acts as a handbrake on economic growth by constraining household spending.

Reliance on High Vehicle and Licence Costs

In FY2025, Vehicle Quota Premium collections were 31% over estimates, reaching $8.66 billion. The COE was a primary driver of our massive surplus, and the government expects even more next year, projecting $9.42 billion in revenue. I am concerned that the government may be relying on high vehicle costs to anchor its fiscal position. This could create a perverse incentive to allow the COE to remain high, and result in inertia against necessary reforms to the COE system, which my Hon. Friend, Assoc Prof Jamus Lim, the MP for Sengkang, had called for in his adjournment motion last September.

There are other significant revenue spikes that I seek clarification from the Minister.

Revenue from Licences and Permits has surged by $2.08 billion—a 29% increase from the original estimate to the Revised FY2025 figure of $9.23 billion. According to the MOF’s Analysis of Revenue and Expenditure 2026, the transition to the new Singapore Public Sector Chart of Accounts (PS-COA) makes year-on-year comparisons for this item “not meaningful” due to changes in scope. However, this accounting reclassification alone does not explain why the government collected $2 billion more than it told this House it would just one year ago. Can the Minister clarify what specific licences or permits drove this increase, and whether this represents a permanent increase in the regulatory burden borne by our households and businesses?

While reclassification of FY2025 figures is promised for FY2027, was there some difficulty in providing it this year, so Parliament could properly track spending changes for this debate? Without a clear bridge between the old and new systems, there is a risk of losing oversight of expenditure growth.

Harnessing AI for the Frontline Workforce

Turning to technology, our AI roadmap must look beyond white-collar copilots. To ensure an inclusive social compact, we must deploy physical AI for blue-collar workers in manufacturing and logistics, for example. This could include tools like wearable haptic sensors that alert workers to ergonomic risks to prevent long-term injury, or collaborative robots to assist with heavy lifting on the factory floor. Furthermore, AI can be a powerful tool for blue-collar workers who may struggle with English language constraints. It can translate vernacular dictation into professional English documentation in real-time, allowing workers to focus on their technical expertise rather than linguistic hurdles. These tools enable productivity gains that lead to enhanced wages and reduced physical strain for those on the frontlines. AI should be an equaliser that elevates technical mastery, not a wedge that separates our workforce.

The government has also allowed 400% tax deductions on AI expenses. I propose that this should include corporate AI subscriptions, to give workers access to corporate AI tools to improve their daily productivity while keeping company data secure. Giving every worker a digital assistant should be a baseline goal for a nation that aspires to be an AI leader. This ensures that the benefits of the technology are shared by the employee and the employer alike.

Evolving Means-Testing Approach

Regarding our social safety net, a gap remains for the “sandwiched” generation which falls just outside existing means-testing thresholds. We need a more holistic means-testing model that looks at not just gross income alone, but disposable income after essential expenses are deducted. A household earning $9,000 with special needs children or elderly parents requiring chronic care may be functionally less wealthy than a household earning $3,000 with no such burdens.

Furthermore, I urge a shift toward individual-based assessments for our seniors to better protect their dignity. No senior should ever be forced to plead with an estranged adult child for financial support simply because that child’s income is bundled into the Per Capita Household Income (PCHI) calculation. When subsidies are tied to the disclosure of a child’s salary, we leave vulnerable seniors at the mercy of strained family dynamics. Our social safety net should be anchored more to a senior’s individual income instead of their children’s, to ensure they receive the care and support they need.

Rebalancing Spending

MTI’s development expenditure is estimated to double to $9.24 billion in FY2026, which is an increase of $4.32 billion in a single year. While the government says this increase is mainly due to initiatives to enhance Singapore’s economic competitiveness in an uncertain global environment, can the Minister shed more light on the specific milestones this money is expected to achieve? For comparison, the entire development budget for the Ministry of Social and Family Development is a mere fraction of this, at just $260 million.

There seems to be a disconnect between the government’s own risk assessment and its fiscal response. The Budget Statement identifies significant risks from an AI benefits reassessment and global trade tensions. Yet, the fiscal impulse of Budget 2026 is only 0.6% of GDP. This stance appears rather passive. If the risk of job displacement and investment decline is as real as the government acknowledges, our fiscal injection should be more robust and proactive, particularly when we are riding on a huge surplus from the previous year. We should be building more buffers for our workers now, rather than reacting after the displacement begins.

National Security

Finally, on the matter of security, the Prime Minister stated that defence spending will remain at 3% of GDP. Does this include the cybersecurity budgets across the government, including those under the Cyber Security Agency, for the protection of critical information infrastructure? With the rise in sophisticated cyber-attacks and hostile information campaigns, it is essential to know the true allocation of security resources.

A Budget of National Values

Mr Speaker, a budget is more than just a balance sheet; it is a statement of our national values and priorities. We cannot be a nation that celebrates multi-billion dollar surpluses while our middle-income families are squeezed, our seniors fear being a financial burden on their children, and our workers worry about a digital future that feels out of reach. Let us build a social compact that does not just manage growth, but shares it fairly and transparently.

We should measure our success not by the absolute size of our reserves, but by the security, dignity and peace of mind of every Singaporean.

Sir, I support the Budget.

Transparency of Government Reserves

Parliament, 7 Feb 2024

Mr Speaker,

In our quest to safeguard the Singapore dollar, especially from the volatilities of currency crises, it is important for a country to hold sufficient Official Foreign Reserves (OFR). We’ve seen the dire consequences of not having enough in the tank during Thailand’s ordeal in 1997. The country’s struggle, stemming in part from currency speculation, led to a severe depletion of its OFR. This forced it to float its currency, triggering an economic crisis which affected the whole region, including Singapore.

The Monetary Authority of Singapore (MAS) has assessed that the “optimal” amount of OFR it needs to provide a “strong buffer” against stresses in the global economy and market is between 65% to 75% of GDP. The central bank assessed this level based on internationally-accepted measures of reserve adequacy and its own practical experience in foreign exchange intervention to ensure the stability of the Singapore dollar.

Since the MAS (Amendment) Act came into force on 21 February 2022, MAS has been allowed to subscribe to Reserves Management Government Securities (RMGS). This allows the transfer of OFR to the government for the long-term investment by GIC. This is OFR above what MAS needs to conduct monetary policy and support financial stability. Should there be a need to supplement the OFR on MAS’ balance sheet in the instance of a tail-risk event, it can redeem the RMGS before maturity at par.

Based on a parliamentary reply by DPM Lawrence Wong to me, as at September 2023, MAS’ current OFR stood at S$455.5 billion or 70% of GDP, with the potential to ramp it up to 106% of GDP by redeeming the RMGS holdings of S$237.6 billion.

This means MAS effectively has access to 31% more foreign reserves than the high end of the range it assesses to be optimal to defend the Sing Dollar.

The value of both MAS’ OFR and RMGS have been revealed publicly. So has the value of Temasek Holdings’ net portfolio. What remains is the value of the reserves held by GIC, which it has only revealed is “well over US$100 billion”. It is estimated to be worth many multiples of that.

In a parliamentary reply on 3 Oct 2023, DPM Wong said we need to brace for extreme tail-risk scenarios, including crises of unprecedented scale that could lead to significant capital outflows beyond MAS’ reserves, or emergencies caused by state or non-state actors threatening our economy, livelihoods or national existence.

Sir, the spectre of extreme scenarios cannot be a carte blanche for maintaining a veil of secrecy over the reserves. Is the government keeping the reserves held by GIC a secret only to prepare for extreme tail-risk scenarios, or is it also to avoid questions from MPs and the public on why our substantial reserves aren’t being invested more in Singaporeans?

Greater transparency serves to both improve governance and foster a more inclusive and informed discussion about our nation’s future. Transparency about the size of our reserves will facilitate more robust public discourse and democratic debate about our country’s long-term budget and expenditure plans. It will ensure that decisions regarding the use of our national wealth are made with the participation and understanding of citizens. Most importantly, it will increase accountability, as my Hon. Friend from Sengkang Jamus Lim has explained in his speech, and build more trust in the government.

Conversely, expecting Members of Parliament to scrutinise, debate and approve the government budget and each ministry’s allocation without full knowledge of our reserves is comparable to making a decision on buying a house without knowing how much money they have in their largest bank account.

Mr Speaker, I urge a review of the government’s stance on the secrecy of the reserves.

If the government wishes to maintain its strategic ambiguity regarding the full size of the reserves, the figures could be shared confidentially with MPs or with a cross-party Standing Select Finance Committee that looks into the health of our reserves and government finances, which the Leader of the Opposition has proposed.

This parliamentary committee will then be able to properly consider the specific funding needs vis-a-vis the threats that Singapore must prepare for and make recommendations to the government on how these needs could be funded.

I support the original motion.

Background checks on foreign nationals before they set up Singapore companies

In March, Justin Sun, a China national who founded BitTorrent Foundation in Singapore, was sued by the US Securities and Exchange Commission (SEC) following allegations of selling unregistered securities, fraud and market manipulation. Sun’s BitTorrent was registered in Singapore under the business activities of “IT and Computer Service Activities,” which greatly differs from the offences his company has been alleged to have committed (i.e. the fraudulent issuance and sale of crypto assets).

I am concerned that foreign nationals could take advantage of the ease of setting up companies in Singapore, so as to use Singapore as a base to boost their reputations and subsequently conduct fraudulent activities. With this concern in mind, I asked the Deputy Prime Minister Lawrence Wong to provide information on the types of background checks undertaken on foreign nationals before they are allowed to set up Singapore companies.

I also asked how the Accounting and Corporate Regulatory Authority (ACRA) verifies whether these companies’ activities are conducted as stated in their applications.

This is my question and DPM Wong’s reply on 4 July 2023:

Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) what background checks are undertaken on foreign nationals before they are allowed to set up Singapore companies; (b) how does ACRA verify whether these companies’ activities are in line with what their directors declared when they were seeking incorporation; and (c) how actively does ACRA investigate companies to verify whether they are conducting activities in accordance with their incorporation documents.

Mr Lawrence Wong: Foreign nationals based overseas must engage the services of an Accounting and Corporate Regulatory Authority (ACRA)-Registered Filing Agent (RFA) to set up Singapore companies. RFA is a professional services firm, such as a law firm, accounting firm or corporate secretarial firm. RFA is responsible to conduct customer due diligence, including verifying identity and background information, confirming the veracity and adequacy of documents and obtaining beneficial ownership information. They are also required to perform ongoing transaction monitoring on their customers and their companies’ business activities after incorporation, to ensure that the activities are consistent with the RFA’s knowledge of the customer, business and risk profile. They must report any suspicious transactions to the Police.

In addition, ACRA will investigate if it receives information that a company is not conducting activities in line with what was declared at incorporation. The company will be referred to the Police if it is suspected to be engaging in illegal activities. To facilitate this, ACRA also makes publicly available much of the information lodged by companies. This helps to ensure that members of the public accessing this information can report any discrepancies to ACRA.

Should there be any indication of false filings, ACRA will take enforcement action against the RFA. Persons who have knowingly provided false or misleading information to ACRA may be subject to fines or imprisonment.

Source: Singapore Parliament Reports (Hansard)

Photo by Esaias Tan on Unsplash

Turf Club closure and impact on stakeholders

In June 2023, it was announced that the Singapore Turf Club (STC) will cease operations in March 2027, and its final race will be on 5 October 2024. I am concerned about the staff and trainers who currently work for horse owners, and the athletes and other stakeholders in the equestrian sports community in view of this impending closure, and asked the Minister several questions in Parliament on 3 July 2023.

First, I asked the Minister for Finance how staff and trainers will be supported in re-training for other jobs.

Second, I asked whether the development of equestrian sports will be impacted and what assistance the government is extending to athletes and other stakeholders in the equestrian sports community.

And third, I asked if Singapore Turf Club employees, contractors and members of the public were consulted on these changes.

These were my full questions and the Minister’s answers:

Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance with regard to the staff and trainers who currently work for horse owners but are not employed by the STC, whether they will be supported by the STC and other Government agencies in re-training for other jobs prior to the closure of STC.

To ask the Deputy Prime Minister and Minister for Finance (a) how will the development of equestrian sports in Singapore be impacted by the closure of the Singapore Turf Club (STC); and (b) what assistance is the Ministry extending to athletes and other stakeholders in this community in view of STC’s impending closure.

To ask the Minister for National Development (a) whether the land use for the Singapore Racecourse under the current URA Master Plan stipulated for sport and recreation has been revised to include use for housing including public housing; (b) if so, when was the revision made; (c) whether consultations were conducted with stakeholders and who were these stakeholders; and (d) whether the stakeholders included Singapore Turf Club employees, contractors and members of the public.

…

Ms Indranee Rajah (Second Minister for Finance and National Development): The decision to close STC was not an easy decision, nor was it made lightly. Given Singapore’s small size and land constraints, the Government continually reviews our land use plans to meet present and future needs. At the same time, local horse racing has also experienced declining spectatorship over the years.

In developing our long-term land use strategies and plans, the Government has actively engaged the public to understand their needs and aspirations. These engagements have strongly affirmed that we need more land for housing, as well as a diversity of spaces for leisure and recreation, to provide a quality living environment for Singaporeans. With the demand for more land for housing and the declining spectatorship for local horse racing, the Government made the difficult decision to redevelop the STC site to better meet our future needs.

Mr Gerald Giam asked whether the use of the Singapore Racecourse site under the current Urban Redevelopment Authority (URA) Master Plan has been revised to include housing. At the Committee of Supply debate earlier this year, the Ministry of National Development (MND) announced that we have started on our Draft Master Plan review, which will take place over the next two to three years. The Government intends to update the revised land use for the site to include housing in the upcoming Master Plan.

…

Ms Hany Soh, Mr Gerald Giam, Mr Sharael Taha and Mr Edward Chia, have asked what assistance will be given to workers affected by the cessation of horse racing. We will make every effort to assist and ease the transition for them.

There are two different groups of workers affected – those employed by STC and those employed by the trainers.

About 350 STC employees are affected. The STC employees will continue to be employed for at least the next 15 months up till October 2024, with some staying until closure in 2027. Upon cessation of their employment, they will receive retrenchment packages in line with the Minister of Manpower (MOM) guidelines. In addition, they will receive job placement assistance, career guidance, skills training and counselling so that they can find new jobs. The National Trades Union Congress (NTUC) has also stepped in to offer support.

The horse trainers employ or engage about another 420 workers. While these are not STC employees, STC will nevertheless lean forward to work with their employers, the trainers, to provide support to these workers and ease their transition. The media had recently reported that some equestrian entities are prepared to offer them jobs. STC will also be extending employment facilitation, skills training and career counselling.

Members have also asked what will happen to the racehorses. There are approximately 700 racehorses. They will have to be rehomed once the races cease. In the meantime, STC has already rolled out support for racehorse owners and trainers for horse maintenance, as well as horse exportation and placement. STC is discussing with owners and trainers what additional support they may need to rehome their horses and will do its best to meet reasonable requests.

Some trainers have highlighted concerns that the owners might abandon their horses. I hope that this is indeed not the case and I would caution any owner against so doing. Owners have the responsibility to look after their horses. It would be an offence under the Animals and Birds Act to abandon their horses or fail to care appropriately for them. STC is committed to working with owners to manage their horses in a responsible manner, such as through rehoming, either overseas or in a stable in Singapore.

Members have also asked about the impact of the closure of STC on equestrian activities in Singapore. While horse racing will cease, other equestrian activities are not affected by STC’s closure. Sport Singapore engages regularly with the Equestrian Federation of Singapore which oversees our national team’s training. The STC’s closure does not affect our national equestrian team’s training, which is located at Jalan Mashhor.

…

Mr Deputy Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song (Aljunied): I thank the Minister for her comprehensive replies. The Minister said that other Equestrian sports will not be affected. Is there currently any scheme to use retired racehorses for other equestrian sports and, if so, would this supply of horses not be constrained after the Singapore racecourse closes down, leading to higher costs for buying and importing horses for equestrian sports?

Ms Indranee Rajah: On the question of retired racehorses going to other equestrian sports, I think that may have to be directed to the Ministry of Culture, Community and Youth (MCCY) in terms of sports. But I just want to clarify something about these horses. These are racehorses and the majority of them would probably continue racing. So, the question is how to get them to places where they can continue to race. So, exportation would be one of the main strategies to deal with these horses. There are other countries — in fact, the exportation of horses does take place quite regularly.

I understand from STC that every month, there are actually a few. They may go to Malaysia, for example. I think some interest has been expressed in Malaysia in taking some of the racehorses from STC when it closes. Australia is another destination although, for Australia, they take in a smaller number.

So, I think the primary strategy for these racehorses would actually be exportation – to allow them to continue to race if their owners so choose. But obviously, this is a conversation that we are having with the owners to see what they would like to do with the horses. But bottom line, we will find homes for all the horses.

Photo by Noah Silliman on Unsplash

Auditor-General’s report and investigations

Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) whether the Auditor-General, on discovery of instances of non-compliance by public sector entities with Government procurement rules and principles, carries out independent investigations in all such instances to determine if any gratification has been paid or received corruptly by the transacting entities; (b) if so, what is the scope of these investigations; and (c) if not, how does the Auditor-General satisfy himself that there is no corrupt gratification involved that necessitates a referral to the Corrupt Practices Investigation Bureau for further investigation.

I asked the DPM and Finance Minister these questions during the 12 August 2013 sitting in response to the Auditor-General’s report and following a letter to the Straits Times Forum by Mr Cheng Shoong Tat (“Any basis for graft probes?”, July 23), which I felt did not receive an adequate reply from the Auditor-General’s Office.

———————————

Assoc Prof Fatimah Lateef asked the Deputy Prime Minister and Minister for Finance following the latest findings by the Auditor-General’s Office, what are the strategies that will be implemented to strengthen procurement practices and procedures in Government agencies and Ministries.

Ms Tan Su Shan asked the Deputy Prime Minister and Minister for Finance in light of the Auditor-General’s Report for FY 2012/2013 which showed lapses in procurement processes and oversight of external consultants (a) what remedial action is being taken by these Ministries and statutory boards to address the weaknesses; and (b) what are the enhanced controls that are being implemented to ensure that such lapses do not happen again.

Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) whether the Auditor-General, on discovery of instances of non-compliance by public sector entities with Government procurement rules and principles, carries out independent investigations in all such instances to determine if any gratification has been paid or received corruptly by the transacting entities; (b) if so, what is the scope of these investigations; and (c) if not, how does the Auditor-General satisfy himself that there is no corrupt gratification involved that necessitates a referral to the Corrupt Practices Investigation Bureau for further investigation.

Assoc Prof Tan Kheng Boon Eugene asked the Deputy Prime Minister and Minister for Finance (a) what are the processes and measures put in place to ensure effective follow up on the findings of irregularities and weaknesses indicated in the Report of the Auditor-General for FY2012/2013; (b) how many public officers have been disciplined in the past five years for lapses in proper accounting, management and use of public funds and resources, and non-compliance with the relevant laws and Government Instruction Manual; and (c) how often are Ministries and statutory boards audited by the Auditor-General’s Office and whether the frequency can be increased.

Mr Pritam Singh asked the Deputy Prime Minister and Minister for Finance in view of the Auditor-General’s remarks in the FY2012/2013 Auditor-General’s Report that procurement has continued to be an area prone to lapses for the last six years and that annual audits are conducted on a test-check basis and do not reveal all irregularities and weaknesses, whether the Government will immediately direct a thorough one-off audit of all Ministries and statutory boards with specific emphasis on procurement-related transactions.

Mr Zaqy Mohamad asked the Deputy Prime Minister and Minister for Finance (a) whether the recent procurement lapses have led to increased time required to (i) approve projects within the public sector and (ii) award tenders and contracts to vendors; (b) whether time between the publication of tenders to the time of award has increased in the past year as compared to the previous years and, if so, what are the types and values of these projects; and (c) whether the Ministry has sought feedback from vendors on any added changes or procedures imposed on them due to the tightening of Government’s procurement process.

Mr Teo Siong Seng asked the Deputy Prime Minister and Minister for Finance whether the latest Report of the Auditor-General which highlights the need for public sector agencies to step up on monitoring of contractors’ performance will further increase the compliance costs of private sector companies bidding for public sector contracts.

The Deputy Prime Minister and Minister for Finance (Mr Tharman Shanmugaratnam): Mdm Speaker, may I have your permission to take Question Nos 5 to 11 together, please?

Mdm Speaker : Yes, please.

Mr Tharman Shanmugaratnam : Members are rightly concerned about the lapses highlighted in this year’s Report of the Auditor-General (the AGO Report). As Deputy Prime Minister Teo as Minister in charge of the Civil Service has just stated, the Government is determined to uphold the highest standards of integrity and professionalism in the Public Service. This resolve certainly applies to the question of public sector procurements.

Before I get into the specific improvements being made, I want to emphasise that the system of checks and balances in procurement operates as a whole. It is not just about rules to ensure fair competition and value for money in public tenders, but also regular audits to detect lapses, and where appropriate, disciplinary actions against those responsible, including supervisors. And where there is any suggestion of corruption or fraud, it is investigated promptly and thoroughly, and the officer faces the full measure of the law, regardless of who he is.

So it is a whole system, and it is working, which is why Singapore is widely recognised internationally as having one of the cleanest and most efficient systems of government anywhere. Nevertheless, we take each finding of a procurement lapse seriously, and take action to minimise recurrence.

Our rules and procedures for procurement are comparable with those in most other reputable jurisdictions, and in line with World Trade Organization standards on open and fair competition.

We review the rules regularly, and especially when we observe weaknesses. Members may recall that in 2010 and 2011, we took major steps to reduce opportunities for procurement fraud. Last year, 2012, we introduced further checks to ensure that single bids offered competitive terms. We also extended the minimum opening period for suppliers to submit bids for quotations from four to seven working days. These are examples of how we review the rules when we see weaknesses and, where it is necessary to tighten, we tighten up.

This year, the AGO Report highlighted that a statutory board had procured a service from a related party in a manner that did not comply with our rules. The procurement rules require that any bid by a related party be treated on a strictly arms-length basis, and that a successful bid has to comply with the tender specifications regardless of ownership. The rules are clear. We are nevertheless reviewing if there is a need to further tighten approval processes for transactions involving related parties.

The procurement lapses cited in this year’s AGO Report are, in fact, all due to non-compliance with established rules, rather than gaps in the rules. It should also be noted that the majority of the findings concern lapses committed before 2012. This partly reflects AGO’s recent focus on Government procurement in its audits, which have included looking at procurements in previous years. Government agencies have since last year made special efforts to improve procurement processes. MOF has also strengthened training programmes for procurement, and developed and disseminated checklists to guide supervisors and officers on what to look out for at the various stages of the procurement process.

We are doing more to build up capabilities, to help officers and supervisors implement the rules well. That includes having the skills and knowledge to seek value for money, and not just accept the cheapest tender bid. As Minister of State Josephine Teo mentioned during this year’s Committee of Supply debate, we are developing a Procurement Specialist Track to build up a strong pool of officers with the skills needed, and with good career progression pathways. The new specialist track will be launched next year. Details will be announced in March.

However, in a system with 80,000 procurements each year, we cannot realistically expect to eliminate all lapses or human error. To seek to do so would be too costly and time-consuming, not just to Government but also to businesses and the public. Our approach, therefore, is to make every reasonable effort to minimise lapses, while undertaking regular audits to check for any that do occur and keeping open channels for suspected irregularities to be reported. Where any lapse is detected, we take actions to minimise recurrence.

MOF has required all Government agencies to ensure that they have an effective system of internal audit and control.
It is crucial that the top management sets the right tone. MOF has reminded the Permanent Secretaries and other Heads of Government Agencies to maintain active oversight of Internal Audit. They will also henceforth be required to report to MOF with an assessment of findings on procurement audits and follow-up actions in their agencies each year, as well as pre-emptive plans to avoid future weaknesses. This is a new reporting system which the Permanent Secretaries and Heads of Agencies will have to comply with. This would include follow-up actions on audit observations by both their internal auditors and the Auditor-General.

We will also keep up with the latest knowledge and techniques in supervision and audit of procurement, including good practices developed in the private sector. MOF will be making available additional analytical tools to help both auditors and senior management of the various agencies review procurement activities more effectively.

Let me turn next to the external audit of our agencies by the Auditor-General’s Office (AGO). AGO conducts annual checks of Ministries with regard to financial statements, as well as internal controls and processes that directly impact on the financial statements. On a less regular basis, AGO also selectively audits other aspects of internal controls in the Ministries, either based on its assessment of risks or arising from public feedback. The Statutory Boards are audited annually by private external auditors. In addition, AGO conducts audits of internal controls of nearly all statutory boards at least once every five years.

AGO’s resources have been significantly enhanced — its manpower has grown by over 50% over the last five years to about 180 staff currently. AGO has also, as I mentioned earlier, focused particularly on procurement issues in recent years. Every finding by the Auditor-General of a procurement lapse is taken very seriously within Government. It leads to improvements in procurement processes, and an awareness not just in the agency concerned but other agencies of the need to avoid the same problems.

AGO’s audits are for practical reasons conducted on a test-check basis. AGO cannot realistically cover all aspects of procurement in all agencies. However, from time to time, the Government does conduct thorough, one-off reviews of specific aspects of procurement across the public sector. For example, before we tightened our procedures in 2012 for handling single bids, we reviewed the procurement transaction data for the entire public sector.

Let me go on to disciplinary actions, which some Members asked about. The cases highlighted in the latest AGO report for fiscal year 2012/2013 were administrative or procedural lapses. There was no evidence of fraud or corrupt intent. That is, in fact, the case with most procurement-related lapses – they are either due to a lack of knowledge, carelessness or poor supervision. But that does not mean that officers are not responsible for their lapses. Agencies will still assess their officers’ roles in each of the lapses and take follow-up actions.

In the last two years, 60 officers and supervisors have been counselled, reprimanded or issued warning letters, depending on the severity of the lapse. Where warranted, officers were penalised in their performance bonuses or increments.

There have been cases in previous years where AGO has basis to suspect corrupt or fraudulent intent. It refers all such cases to the Commercial Affairs Department (CAD) or the Corrupt Practices Investigation Bureau (CPIB) for further investigation.
Mr Zaqy Mohamad and Mr Teo Siong Seng have asked about the impact of our tightening measures in recent years on procurement efficiency and vendors.

Our main aim is to improve compliance, build capabilities and strengthen audit. These do not impact vendors directly. A number of the rules that were refined can, in fact, improve procurement efficiency and benefit vendors. For example, since we introduced new rules last year on single bids, and extended the minimum quotation period from four working days to seven days, the percentage of quotations receiving single bids has decreased to about 4% in 2013 to date, from 15% in 2012.

Mr Zaqy and Mr Teo’s questions, however, relate to a broader point. We should not burden Government procurement with ever-increasing rules and procedures. Doing so would slow down the Government’s functions and its responses to needs, and often impose higher costs. It can also deter some businesses from participating in government tenders.

We should keep instead to a sensible balance of rules, audit and enforcement actions, so as to minimise risk of wrong-doing without hindering the vast majority of legitimate procurements, or causing civil servants to become risk-averse and bureaucratic in handling procurements.

We have been taking steps in recent years, Mdm, Speaker, to strengthen the procurement system. However, the public sector’s procurement needs will grow and become more diverse in the years to come. We are placing greater emphasis, therefore, on supervision and top-level oversight, by requiring the Heads of Government Agencies to assess and report to MOF on follow-up actions where problems are found, and on their pre-emptive plans. MOF itself will monitor the timeliness and effectiveness of these actions, and review further practical ways in which we can preserve the well-functioning of government procurement.

* * * * *

Mr Gerald Giam Yean Song (Non-Constituency Member): Madam, I have three supplementary questions for the Deputy Prime Minister. Firstly, of the many procurement lapses discovered by the Auditor-General in this year’s report, were there indications of gratification being paid, given or received by public servants in any of them? Secondly, does the AGO presume that any procurement lapses may involve gratification and, therefore, conducts specific investigations to discover that? Thirdly, if there gratification is found to be involved, does the AGO presume that there may be corruption involved, unless the contrary is proven, in accordance with Section 8 of the Prevention of Corruption Act?
Mr Tharman Shanmugaratnam : First, with regard to this year’s procurement lapses, there was no basis to suspect gratification. There was certainly no evidence of it; no basis to suspect fraudulent or corrupt intent. Where there is any evidence of gratification, then by definition and presumption, there is corruption. In fact in some of the cases in the last five years – not this year’s report but previous years’ – there was reason to suspect that there might be some fraudulent or corrupt intent. In those instances, AGO refers the cases to either the Commercial Affairs Department or CPIB. That, in fact, is being done.

—————-

Source: Singapore Parliament Reports (Hansard)