SINGAPORE: The Estimates Committee presented its second report to Parliament on Thursday, having looked into the Budget for Financial Year 2013/2014, and enquiring into measures to control rising household debt and assistance schemes to cope with the rising cost of living, among others.
The committee, chaired by Deputy Speaker Seah Kian Peng, noted that in recent years, there had been a rise in household debt and it supported the recent measures taken to control it.
It also backed the Total Debt Servicing Ratio (TDSR) Framework, which requires financial institutions, when granting property loans, to ensure that a borrower's monthly total debt repayments do not exceed 60 per cent of gross monthly income.
It urged the Ministry of Finance (MOF) and the Monetary Authority of Singapore (MAS) to monitor the effects of these policies and their effectiveness in reducing household debt.
The committee recommended that MOF and MAS pay close attention to the percentage of borrowers within the TDSR band of 40 per cent to 60 per cent, noting that unexpected increases in interest rates or a slowdown in the economy might adversely affect their ability to repay their loans.
It said that while the pawnbrokers and licensed moneylenders' share of total credit in the economy was small, the number of transactions might be significant.
It also expressed concern that the growth of such businesses in the heartlands might indicate a growing number of transactions involving a vulnerable group of lower-income Singaporeans who borrow smaller amounts of unsecured credit.
It urged MAS and the Ministry of Law (MinLaw) to consider a more in-depth monitoring on the impact and growth of such businesses.
The committee also looked into whether the measures to cope with the rising cost of living, such as the GST Voucher scheme, Workfare Income Supplement and ComCare, had been effective in assisting households at the different income segments.
It commended the government for the various measures implemented to help Singaporeans cope with the increased costs, and urged it to keep improving and expanding its continuous education and skills upgrading programmes.
Looking into the Special Employment Credit Scheme, which was set up to raise the employability of older low-wage Singaporeans, the committee endorsed MOF's efforts to support employers.
It said it was encouraged by the increased take-up rate for the Productivity and Innovation Credit Scheme, and urged MOF to "extend the approach of supporting companies in driving innovation and improving productivity" beyond next year, when the scheme was due to expire.
On the Wage Credit Scheme, which was set up to help businesses raise workers' salaries, the committee urged MOF to monitor the impact of the scheme and to continue reminding and encouraging more companies to share their productivity gains with their employees.
It also asked MOF to review the implementation of the various productivity and incentive schemes to ensure that social enterprises which are registered as companies limited by guarantee were not excluded.
The committee also looked into the work of the Financial Education Steering Committee (FESC) and its reviews of Singapore's financial education efforts.
It urged FESC to work with Credit Counselling Singapore, MAS and MinLaw to optimise their outreach to Singaporeans who defaulted on unsecured loans. - CNA/ms
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