Volume V Monday No. 23 16th December, 1963

PARLIAMENTARY DEBATES

DEWAN RA'AYAT (HOUSE OF REPRESENTATIVES)

OFFICIAL REPORT

CONTENTS

SITTING OF THE HOUSE (Motion) [Col. 2389] ORAL ANSWERS TO QUESTIONS [Col. 2390] BILLS: The Court of Judicature Bill—Committee [Col. 2397] The Advocates and Solicitors (Amendment) Bill [Col. 2413] The Local Authorities (Conditions of Service) Bill [Col. 2414] The Supply (1964) Bill [Col. 2438]

DI-CHETAK DI-JABATAN CHETAK KERAJAAN OLEH THOR BENG CHONG, A.M.N., PENCHETAK KERAJAAN KUALA LUMPUR 1964 MALAYSIA

DEWAN RA'AYAT (HOUSE OF REPRESENTATIVES) Official Report

Fifth Session of the First Dewan Ra'ayat

Monday, 16th December, 1963 The House met at Ten o'clock a.m. PRESENT: The Honourable Mr Speaker, DATO' HAJI MOHAMED NOAH BIN OMAR, P.M.N., S.P.M.J., D.P.M.B., P.I.S., J.P. „ the Prime Minister, Minister of External Affairs and Minister of Information and Broadcasting, Y.T.M. TUNKU ABDUL RAHMAN PUTRA AL-HAJ, K.O.M. (Kuala Kedah). „ the Deputy Prime Minister, Minister of Defence and Minister of Rural Development, TUN HAJI ABDUL RAZAK BIN DATO' HUSSAIN, S.M.N. (Pekan). „ the Minister of Internal Security and Minister of the Interior, DATO' DR ISMAIL BIN DATO' HAJI ABDUL RAHMAN, P.M.N. (Johor Timor). „ the Minister of Finance, ENCHE' TAN SIEW SIN, J.P. (Melaka Tengah). „ the Minister of Works, Posts and Telecommunications, DATO' V. T. SAMBANTHAN, P.M.N. (Sungai Siput). „ the Minister of Transport, DATO' HAJI SARDON BIN HAJI JUBIR, P.M.N. (Pontian Utara). „ the Minister of Agriculture and Co-operatives, ENCHE' MOHAMED KHIR BIN JOHARI (Kedah Tengah). „ the Minister of Labour and Social Welfare, ENCHE' BAHAMAN BIN SAMSUDIN (Kuala Pilah). the Minister of Health, ENCHE' ABDUL RAHMAN BIN HAJI TALIB (Kuantan). „ the Minister of Commerce and Industry, DR LIM SWEE AUN, J.P. (Larut Selatan). the Minister of Education, TUAN HAJI ABDUL HAMID KHAN BIN HAJI SAKHAWAT ALI KHAN, J.M.N., J.P. (Batang Padang). „ the Minister of Sarawak Affairs, DATO TEMENGGONG JUGAH ANAK BARIENG, P.D.K. (Sarawak). „ the Assistant Minister of the Interior, ENCHE' CHEAH THEAM SWEE (Bukit Bintang). „ the Assistant Minister of Labour and Social Welfare, ENCHE' V. MANICKAVASAGAM, J.M.N., P.J.K. (Klang). „ the Assistant Minister of Commerce and Industry, TUAN HAJI ABDUL KHALID BIN AWANG OSMAN (Kota Star Utara). the Assistant Minister of Information and Broadcasting, DATU MOHAMED ISMAIL BIN MOHAMED YUSOF, P.D.K. (Jerai). 2383 16 DECEMBER 1963 2384

The Honourable the Assistant Minister of Rural Development (Sarawak), ENCHE' ABDUL-RAHMAN BIN YA'KUB (Sarawak). „ ENCHE' ABDUL AZIZ BIN ISHAK (Kuala Langat). ENCHE' ABDUL GHANI BIN ISHAK, A.M.N. (Melaka Utara). ENCHE' ABDUL RAUF BIN A. RAHMAN, K.M.N., P.J.K. (Krian Laut). „ ENCHE' ABDUL RAZAK BIN HAJI HUSSIN (Lipis). ENCHE' ABDUL SAMAD BIN OSMAN (Sungai Patani). TOH MUDA HAJI ABDULLAH BIN HAJI ABDUL RAOF (Kuala Kangsar). TUAN HAJI ABDULLAH BIN HAJI MOHD. SALLEH, A.M.N., P.I.S. (Segamat Utara). TUAN HAJI AHMAD BIN ABDULLAH (Kota Bharu Hilir). ENCHE' AHMAD BIN ARSHAD, A.M.N. (Muar Utara). „ ENCHE' AHMAD BIN MOHAMED SHAH, S.M.J. (Johor Bahru Barat). „ TUAN HAJI AHMAD BIN SAAID (Seberang Utara). „ ENCHE' AHMAD BIN HAJI YUSOF, P.J.K. (Krian Darat). „ CHE' AJIBAH BINTI ABOL (Sarawak). „ O. K. K. DATU ALIUDDIN BIN DATU HARUN, P.D.K. (Sabah). ENCHE' AWANG DAUD BIN MATUSIN (Sarawak). „ TUAN HAJI AZAHARI BIN HAJI IBRAHIM (Kubang Pasu Barat). „ ENCHE' AZIZ BIN ISHAK (Muar Dalam). DR BURHANUDDIN BIN MOHD. NOOR (Besut). „ ENCHE' JONATHAN BANGAU ANAK RENANG (Sarawak). PENGARAH BANYANG (Sarawak). ENCHE' CHAN CHONG WEN, A.M.N. (Kluang Selatan). ENCHE' CHAN SIANG SUN (Bentong). „ ENCHE' CHIN SEE YIN (Seremban Timor). ENCHE' V. DAVID (Bungsar). „ ENCHE' DAGOK ANAK RANDEN (Sarawak). ENCHE' EDWIN ANAK TANGKUN (Sarawak). „ DATIN FATIMAH BINTI HAJI HASHIM, P.M.N. (Titra-Padang Terap). ENCHE' GANING BIN JANGKAT (Sabah). „ ENCHE' GEH CHONG KEAT, K.M.N. (Penang Utara). „ ENCHE' HAMZAH BIN ALANG, A.M.N. (Kapar). ENCHE' HANAFI BIN MOHD. YUNUS, A.M.N. (Kulim Utara). ENCHE' HARUN BIN ABDULLAH, A.M.N. (Baling). ENCHE' HARUN BIN PILUS (Trengganu Tengah). TUAN HAJI HASAN ADLI BIN HAJI ARSHAD (Kuala Trengganu Utara). „ TUAN HAJI HASSAN BIN HAJI AHMAD (Tumpat). „ ENCHE' HASSAN BIN MANSOR (Melaka Selatan). ENCHE' STANLEY HO NGUN KHIU, A.D.K. (Sabah). ENCHE' HONG TECK GUAN (Sabah). ENCHE' HUSSEIN BIN TO' MUDA HASSAN (Raub). 2385 16 DECEMBER 1963 2386

The Honourable ENCHE' HUSSEIN BIN MOHD. NOORDIN, A.M.N., P.J.K. (Parit). TUAN HAJI HUSSAIN RAHIMI BIN HAJI SAMAN (Kota Bharu Hulu). ENCHE' IKHWAN ZAINI (Sarawak). ENCHE' IBRAHIM BIN ABDUL RAHMAN (Seberang Tengah). „ ENCHE' ISMAIL BIN IDRIS (Penang Selatan). „ ENCHE' ISMAIL BIN HAJI KASSIM (Kuala Trengganu Selatan). PENGHULU JINGGUT ANAK ATTAN (Sarawak). „ ENCHE' JHUMAH BIN SALIM (Sabah). „ ENCHE' KANG KOCK SENG (Batu Pahat). „ ENCHE' K. KARAM SINGH (Damansara). „ CHE' KHADIJAH BINTI MOHD. SIDEK (Dungun). ENCHE' KADAM ANAK KIAI (Sarawak). ENCHE' EDMUND XANGGU ANAK SAGA (Sarawak). „ ENCHE' LEE SIOK YEW, A.M.N. (Sepang). „ ENCHE' LIM HUAN BOON (Singapore). „ ENCHE' LIU YOONG PENG (Rawang). ENCHE' PETER LO SU YIN (Sabah). O. K. K. HAJI MAHALI BIN O. K. K. MATJAKIR, A.D.K. (Sabah). „ ENCHE' MOHAMED BIN UJANG (Jelebu-Jempol). „ ENCHE' MOHAMED ABBAS BIN AHMAD (Hilir Perak). „ ENCHE' MOHD. ARIF SALLEH, A.D.K. (Sabah). ENCHE' MOHAMED ASRI BIN HAJI MUDA (Pasir Puteh). ENCHE' MOHD. DUN BIN BANIR, A.D.K. (Sabah). „ ENCHE' MOHAMED NOR BIN MOHD. DAHAN (Ulu Perak). DATO' MOHAMED HANIFAH BIN HAJI ABDUL GHANI, P.J.K. (Pasir Mas Hulu). „ ENCHE' MOHAMED YUSOF BIN MAHMUD, A.M.N. (Temerloh). TUAN HAJI MOKHTAR BIN HAJI ISMAIL (Perlis Selatan). TUAN HAJI MUHAMMAD SU'AUT BIN HAJI MUHD. TAHIR (Sarawak). NIK MAN BIN NIK MOHAMED (Pasir Mas Hilir). ENCHE' NG ANN TECK (Batu). ENCHE' NGUI AH KUI, A.D.K. (Sabah). ENCHE' OTHMAN BIN ABDULLAH, A.M.N. (Perlis Utara). ENCHE' ABANG OTHMAN BIN ABANG HAJI MOASILI (Sarawak). „ TUAN HAJI REDZA BIN HAJI MOHD. SAID, J.P. (Rembau-Tampin). ENCHE' SANDOM ANAK NYUAK (Sarawak). ENCHE' SEAH TENG NGIAB (Muar Pantai). „ ENCHE' D. R. SEENIVASAGAM (Ipoh). ENCHE' S. P. SEENIVASAGAM (Menglembu). „ ENCHE' SIM BOON LIANG (Sarawak). „ ENCHE' SNG CHIN JOO (Sarawak). „ ENCHE' SONG THIAN CHEOK (Sarawak). TUAN SYED ESA BIN ALWEE, J.M.N., S.M.J., P.I.S. (Batu Pahat Dalam). 2387 16 DECEMBER 1963 2388

The Honourable TUAN SYED HASHIM BIN SYED AJAM, A.M.N., P.J.K., J.P. (Sabak Bernam). „ TUAN SYED JA'AFAR BIN HASAN ALBAR, J.M.N. (Johor Tenggara). „ ENCHE' TAJUDIN BIN ALI, P.J.K. (Larut Utara). ENCHE' TAN CHENG BEE, J.P. (Bagan). ENCHE' TAN PHOCK KIN (Tanjong). ENCHE' TAN TSAK YU (Sarawak). ENCHE' TAN TYE CHEK (Kulim-Bandar Bahru). TENGKU BESAR INDERA RAJA IBNI AL-MARHUM SULTAN IBRAHIM, D.K., P.M.N. (Ulu Kelantan). „ DATO' TEOH CHZE CHONG, D.P.M.J., J.P. (Segamat Selatan). ENCHE' TOO JOON HING (Telok Anson). „ PENGHULU FRANCIS UMPAU ANAK EMPAM (Sarawak). ENCHE' V. YEERAPPEN (Seberang Selatan). WAN ABDUL RAHMAN BIN DATU TUANKU BUJANG (Sarawak). WAN MUSTAPHA BIN HAJI ALI (Kelantan Hilir). WAN SULAIMAN BIN WAN TAM, P.J.K. (Kota Star Selatan). ENCHE' YAHYA BIN HAJI AHMAD (Bagan Datoh). ENCHE' YEH PAO TZE (Sabah). „ ENCHE' YEOH TAT BENG (Bruas). ENCHE' STEPHEN YONG KUET TZE (Sarawak). ENCHE' YONG WOO MING (Sitiawan). „ PUAN HAJJAH ZAIN BINTI SULAIMAN, J.M.N., P.I.S. (Pontian Selatan). „ TUAN HAJI ZAKARIA BIN HAJI MOHD. TAIB (Langat). „ ENCHE' ZULKIFLEE BIN MUHAMMAD (Bachok).

ABSENT: The Honourable the Minister without Portfolio, DATO' ONG YOKE LIN, P.M.N. (Ulu Selangor). ENCHE' ABDUL RAHIM ISHAK (Singapore). ENCHE' AHMAD BOESTAMAM (Setapak). ENCHE' CHAN SWEE HO (Ulu Kinta). ENCHE' CHAN YOON ONN (Kampar). „ ENCHE' CHIA THYE POH (Singapore). DATU GAME GILONG, P.D.K., J.P. (Sabah). DR GOH KENG SWEE (Singapore). „ ENCHE' HO SEE BENG (Singapore). ENCHE' JEK YEUN THONG (Singapore). ENCHE' KHONG KOK YAT (Batu Gajah). ENCHE' KOW KEE SENG (Singapore). „ ENCHE' LEE KUAN YEW (Singapore). ENCHE' LEE SAN CHOON, K.M.N. (Kluang Utara). „ ENCHE' LEE SECK FUN (Tanjong Malim). ENCHE' AMADEUS MATHEW LEONG, A.D.K. (Sabah). 2389 16 DECEMBER 1963 2390

The Honourable ENCHE' CHARLES LINANG (Sarawak). ENCHE' LING BENG SIEW (Sarawak). „ ENCHE' LIM JOO KONG, J.P. (Alor Star). ENCHE' LIM KEAN SIEW (Dato Kramat). ENCHE' LIM KIM SAN (Singapore). ENCHE' T. MAHIMA SINGH, J.P. (Port Dickson). „ ENCHE' MOHAMED DAHARI BIN HAJI MOHD. ALI (Kuala Selangor). „ ORANG TUA MOHAMMAD DARA BIN LANGPAD (Sabah). „ ENCHE' PETER J. MOJUNTIN, A.D.K. (Sabah). ENCHE' ONG PANG BOON (Singapore). „ TUAN HAJI OTHMAN BIN ABDULLAH (Tanah Merah). ENCHE' OTHMAN BIN WOK (Singapore). ENCHE' QUEK KAI DONG, J.P. (Seremban Barat). ENCHE' S. RAJARATNAM (Singapore). „ DATU DONALD ALOYSIUS STEPHENS, P.D.K. (Sabah). ENCHE' TAN KEE GAK (Bandar Melaka). DR TOH CHIN CHYE (Singapore). „ WAN YAHYA BIN HAJI WAN MOHAMED, K.M.N. (Kemaman). „ ENCHE' WEE TOON BOON (Singapore). ENCHE' YONG NYUK LIN (Singapore).

PRAYERS ORAL ANSWERS TO QUESTIONS (Mr Speaker in the Chair) SITTING OF THE HOUSE ROYAL MALAYSIAN NAVY- SHIP REPAIR AND COST (Motion) The Deputy Prime Minister (Tun Haji 1. Enche' V. David (Bungsar) (Under Standing Order 24 (2)) asks the Minister Abdul Razak): Mr Speaker, Sir, I beg of Defence to state whether one of the to move— terms of acquisition of the ships for That notwithstanding the provision of the Royal Malaysian Navy by the Standing Order 12 (1), this House at its rising at 1.00 p.m. today shall stand sus­ Government is that repairs shall be pended and shall resume at 2.30 p.m. and done by the British Admiralty. continue until the motion for the Second Reading of the Supply Bill 1964 has been The Minister of Defence (Tun Haji seconded, whereupon it shall stand Abdul Razak): No, Sir, there are no adjourned. such terms. Sir, the purpose of this motion is purely to enable my colleague the 2. Enche' V. David (Under Standing Minister of Finance to make his Order 24 (2)) asks the Minister of Budget Speech at the usual time. Defence to state the amount of money The Minister of Finance (Enche' Tan paid to the British Admiralty for Siew Sin): Mr Speaker, Sir, I beg to repairs to ships of the Royal Malay­ second the motion. sian Navy for the years 1959, 1960, 1961, 1962 and 1963. Question put, and agreed to. Resolved, Tun Haji Abdul Razak: Sir, we That notwithstanding the provision of have no dockyard of our own at the Standing Order 12 (1), this House at its rising moment. We propose to start establish­ at 1.00 p.m. today shall stand suspended and ing one early in 1964. For small normal shall resume at 2.30 p.m. and continue until repairs we use the ordinary commercial the motion for the Second Reading of the Supply Bill 1964 has been seconded, where­ firms, but where the work is too upon it shall stand adjourned. technical for commercial firms to 2391 16 DECEMBER 1963 2392 undertake we have our ships repaired Tun Haji Abdul Razak: We make at the British Naval Dockyard. From requests for seconded officers to coun­ 1959 to 1963 we paid the following tries which are in a position to provide amount: us with these officers, and the Honour­ Year Amount able Member for Kuala Langat knew 1959 $235,738 when he was in the Cabinet that we 1960 288,347 approached all Commonwealth coun­ tries for assistance, particularly in 1961 219,256 defence, and naturally we accept 1962 127,812 officers from those countries which can 1963 (up to 31st October) 282,610 help us. Enche' Abdul Aziz bin Ishak (Kuala Enche' Abdul Aziz bin Ishak: That Langat): Will the Minister of Defence was not entirely correct, because the say whether the dockyard will be policy of the Alliance Government was ready in 1964, or will the work on the to give preference to the white Com­ dockyard begin in 1964? monwealth countries rather than the non-white. That is why I am on this Tun Haji Abdul Razak: The work side of the House now. will begin in 1964. It will take a couple of years to get the dockyard ready. Tun Haji Abdul Razak: Sir, the trouble is that the Honourable Member ROYAL MALAYSIAN NAVY- is either misinformed, or he is twisting EXPATRIATE OFFICERS AND his facts. RANKS Enche' V. David: Can the Minister clarify whether any formal request has 3. Enche' V. David (Under Standing been made to India? Order 24 (2)) asks the Minister of Defence to state the number of Tun Haji Abdul Razak: I have said, expatriate officers and their ranks in Sir, that we always make requests to the Royal Malaysian Navy. countries which are in a position to give us assistance. Tun Haji Abdul Razak: Sir, the number of seconded officers and their Enche' V. David: Can the Minister specifically state what are the countries ranks in the Royal Malaysian Navy to which he has made such requests? are as follows: Commodore ... 1 (Australian) Tun Haji Abdul Razak: I said that we have made requests to countries Captain ... 1 (British) which are in a position to give us this Commander ... 3 (British) assistance. I am not in a position to 1 (Australian) state these countries. 1 (New Zealander) Enche' Zulkiflee bin Muhammad Lt Commander 11 (British) (Bachok): Tuan Yang di-Pertua, ber- 4 (Australian) banding dengan bilangan yang di- Lieutenant ... 11 (British) sebutkan oleh Yang Berhormat 1 (Australian) Timbalan Perdana Menteri tadi ada 2 (New Zealander) lebeh 80 pegawai2 anak negeri ini. 2 Sub-Lieutenant 4 (British) Boleh-kah saya mendapat tahu taraf pegawai itu yang paling tinggi, dan As against this, we have 82 Malaysian bagaimana ranchangan Kerajaan mem- officers. pertinggikan lagi taraf itu? Enche' Abdul Aziz bin Ishak: Are Tun Haji Abdul Razak: Tuan Yang there no officers from the non-white di-Pertua, saya tidak dapat hendak Commonwealth countries? memberi ditel sekarang, saya berke- Tun Haji Abdul Razak: No, Sir, not hendakkan notis. Akan tetapi, saya boleh terangkan bahawa Kerajaan at the moment. mengambil langkah bagi melatehkan Enche' Abdul Aziz bin Ishak: Why pegawai2 itu daripada satu masa ka- not, Sir? satu masa. 2393 16 DECEMBER 1963 2394 Enche' Abdul Aziz bin Ishak: Tuan To my knowledge, it has. And, I also Speaker, ada-kah sasaran atau target understand that the Shoe Manu­ bagi memenohi chita2 itu? facturers' Association has made repre­ sentation to the Ministry of Commerce Tun Haji Abdul Razak: Tuan Yang and Industry. Sir, can the Government di-Pertua, ada. answer whether it is a position to Enche' Zulkiflee bin Muhammad: further restrict the import of shoes, Tuan Yang di-Pertua, walau pun when those shoes imported can be Yang Berhormat Menteri berkehendak- locally manufactured? kan notis dalam perkara ini, boleh Dr Lim Swee Aun: Sir, as I have jadi yang banyak2, tetapi boleh-kah pointed out just now, the question Yang Berhormat Menteri menerang- posed is whether local shoe industries kan satu pangkat yang tertinggi sa-kali are affected by unrestricted imports, yang di-dapat dan di-chapai oleh anak but there is no unrestricted import, or negeri ini dalam ketenteraan negeri that imports are reducing. ini? Enche' V. David: When the same Tun Haji Abdul Razak: Sekarang, type of shoes imported can be manu­ Tuan Yang di-Pertua, ada beberapa factured in this country, is the Govern­ pegawai2 anak negeri ini yang menjadi ment prepared to abandon the import commander kapal2 perang kita. of such shoes, which could be manu­ factured here? LOCAL SHOE INDUSTRY- Dr Lim Swee Aun: Sir, ours is a free EFFECT OF FOREIGN SHOE enterprise, therefore there is no IMPORT question of quota restriction. 4. Enche' V. David asks the Minister of Commerce and Industry whether he Enche' V. David: Mr Speaker, Sir, is aware that local shoe industries are that means your free enterprise can be being affected by unrestricted import permitted to destroy local industry? of foreign shoes, and if so, would he Dr Lim Swee Aun: Not necessarily, state the nature of action taken by the Sir, because if there is a case they can Government. always appear before the Tariff Advisory Board and ask for tariff The Minister of Commerce and protection. Industry (Dr Lim Swee Aun): Mr Speaker, Sir, our exports of footwear Enche' V. David: Is it not true that have always been higher than our by deliberately allowing these shoes to imports. According to the following be imported into this country local trade statistics Malaya's imports of industries are being destroyed in­ footwear have fallen while her exports directly? have increased: in 1961 we imported Dr Lim Swee Aun: No. 107,118 dozen pairs of shoes valued at $5.1 million, and in 1962 these BANK OF CHINA—PERMISSION imports have dropped to 97,505 dozen TO OPERATE IN KUALA LUMPUR pairs valued at $4.5 million; on the other hand, in 1961 our exports of 5. Enche' V. David asks the Minister shoes amounted to 323,543 dozen pairs of Finance to state whether the valued at $5.4 million, and in 1962 Government would consider permitting the exports have increased to 412,419 the Bank of China to operate in dozen pairs valued at $6.3 million. I Kuala Lumpur since there is already am, therefore, not aware that the a branch in Singapore. local industries are affected by un­ The Minister of Finance (Enche' Tan restricted import of foreign shoes. Siew Sin): No. Enche' V. David: Mr Speaker, Sir, Enche' V. David: May I know the the Minister has stated a different reason, Sir? picture entirely. My question speci­ Enche' Tan Siew Sin: Section 4 (c) fically states that whether imports of of the Banking Ordinance, 1958 pro­ shoes have affected the local industry. hibits the issue of a licence to carry 2395 16 DECEMBER 1963 2396 on banking business in the States of Dr Lim Swee Aun: The capital of Malaya to any company in respect of the Rothman Company comes from which the Government is satisfied that Rothmans, London. 50 per cent or more of its issued and paid-up capital is owned by or on Enche' V. David: Is it not indirectly behalf of a foreign Government or by from South Africa? an agency of such a Government, or Dr Lim Swee Aun: Not that I am that the majority of the members of aware of. the Board controlling the bank are Enche' V. David: Well, to make appointed by or on behalf of such a Government or agency. The Bank yourself aware, will you investigate of China comes under the provision of into it? this Section and is, therefore, precluded Dr Lim Swee Aun: The figure shows from being allowed to operate in that it is from Rothmans, London. Kuala Lumpur. Mr Speaker: Order! Order! I cannot Enche' V. David: Sir, is the Minister allow two Members speaking at the aware that the same Bank is operating same time. {To Enche V. David) When in Singapore? After the establishment you finish your question, sit down and of Malaysia is it not fair that this wait for the answer. {Laughter). Well, privilege be extended also to the Bank he is giving an answer now, so you to operate in the Federation? better sit down. Dr Lim Swee Aun: The answer is Enche' Tan Siew Sin: The present that Rothmans, Malaya, derives its position of the Bank in Singapore is capital from Rothmans, London. that it is licensed to carry on banking business in that State under the Singa­ Enche' V. David: Mr Speaker, Sir, pore Banking Ordinance. When the the Minister said he is not aware that Federation Banking Ordinance, 1958 the Rothman Company has South is extended to Singapore, Sabah and African capital. Will he make an effort Sarawak, it is the intention of the to investigate and ascertain the views Government to make appropriate whether indirectly South African provisions to allow all banks operating capital come through London? under the existing banking legislation Dr Lim Swee Aun: Sir, he did not of these States to continue to carry on ask me for the indirect implication. banking business in their respective He asked me whether or not there was places of business. South African capital and I have made investigations and Rothmans, Malaya INDUSTRIES WITH SOUTH told me definitely that their capital AFRICAN CAPITAL—MALAYA came from Rothmans, London. 6. Enche' V. David asks the Minister Enche' V. David: Mr Speaker, Sir, of Commerce and Industry to state I like to know whether, directly or how many industries are operating in indirectly, the South African capital is Malaya with South African capital. involved in the Rothman Company or not. Dr Lim Swee Aun: Mr Speaker, Sir, Dr Lim Swee Aun: I am not aware. there are no pioneer industries opera­ ting in Malaya with South African Enche' V. David: If the Honourable capital. As regards non-pioneer indus­ Minister is not aware, will he investi­ tries, however, investigations carried gate into that? out so far have revealed that there is Dr Lim Swee Aun: I have investi­ no South African capital in these gated. (Laughter). industries. Enche' V. David: Mr Speaker, Sir, Enche' V. David: Mr Speaker, Sir, the Honourable Minister is giving con­ may I know from the Honourable tradicting answers: he said he was not Minister where does the capital of the aware; he said he had investigated the Rothman Company come from? matter; and then he said the answer 2397 16 DECEMBER 1963 2398 is "No". He was not aware, and di-Pertuan Agong may by notifi­ yesterday he had answered "No". Well, cation in the Gazette appoint." I would like to have a clear answer Question put, and agreed to. from the Honourable Minister whether Clause 2, as amended, ordered to he has investigated; and if he has not stand part of the Bill. investigated, and if he is not aware of the situation, let him at least investi­ Clauses 3 to 10 inclusive ordered to gate and find out whether there is any stand part of the Bill. South African capital imposed in the Rothmans. Clauses 11 to 20— Enche' Tan Phock Kin (Tanjong): Dr Lim Swee Aun: As I have said Mr Chairman, Sir, I would like to seek again and again, I have investigated some clarification from the Honourable from Rothmans, Malaya as to where Assistant Minister with regard to the their capital came from, and they statement on Clause 14 (3) and (4). In categorically stated that it came from introducing the Bill, the Honourable Rothmans, London. There is no South the Assistant Minister stated in no African capital, and he will not. accept uncertain terms that it is the intention that for an answer. of the Government not to change the present position with regard to practis­ BILLS ing advocates in the States of Sarawak and Borneo; and arising from a state­ THE COURTS OF JUDICATURE ment made by my Honourable friend BILL from Sarawak, with regard to the posi­ tion of practitioners in the two States, Committee the Honourable the Assistant Minister Bill committed to a Committee of replied that he was not sure, with the whole House. regard to the statement made by the Honourable Member from Sarawak, as House immediately resolved itself to whether a practitioner in Sarawak at into a Committee on the Bill. the present moment can also practise in Bill considered in Committee. Borneo, and he went on to assure this House that should that be the case, he (Mr Speaker in the Chair) is quite prepared to consider amend­ ment in a year or so. May I point out Clause 1 ordered to stand part of the to the Honourable the Assistant Bill. Minister that this is a very important Clause 2— provision of the Bill, because on this particular clause the income of a practi­ The Assistant Minister of Rural tioner depends? A practitioner now Development (Sarawak) (Enche' Abdul- derives his income from both Sarawak Rahman bin Ya'kub): Mr Chairman, and Borneo, and with the passage of Sir, there is a slight amendment to this Bill he will not be able to practise Clause 2. When the Bill was first in the two territories. I believe that drafted, it was expected that it would this is a very important measure, and I come before the House some time in feel that the Minister must be sure November, so that it would be in time before introducing this Bill. There is a to receive Royal Assent before the end lapse of two days since he made a of the year. As things have gone now, statement in this House, and I wonder it is not perhaps possible to obtain whether he has already ascertained the Royal Assent until perhaps next facts from the officials concerned. If month. Therefore, I beg to move that so, and if the position put forward by Clause 2 be amended—the phraseology the Honourable Member from Sarawak in Clause 2 be substituted by that is true, will he consider making appro­ submitted to the Clerk which reads: priate amendments to the Bill now? If ''Commence- 2. Save as otherwise in this Act not, I do not know what to say, but ment. expressly provided, the provi­ sions of this Act shall come into perhaps he can consider postponing force on such date as the Yang consideration of the Bill for a day or 2399 16 DECEMBER 1963 2400

so, to enable him to make the necessary insult the judges as what the Honour­ clarification. able Assistant Minister was trying to say—he stated that we must trust the Wan Mustapha bin Haji Ali (Kelan- judges. Of course we do trust the tan Hilir): Mr Chairman, Sir, I am judges. I am a lawyer, I am practising, afraid I have to refer again to Clause and if I do not trust the judges, I 15. No doubt I spoke on Clause 15 last won't practise in this country. It is Saturday raising certain queries, and most unfortunate, as far as I am aware, also gave my comments and observa­ that the Assistant Minister is not a tions; in fact, I made certain recom­ practising lawyer: he does not know mendations in respect of this clause. the difficulties we lawyers have in It was most regretting that the Hon­ Court. If the law is not certain, and ourable the Assistant Minister, who there is uncertainty, then there is introduced this Bill, did not reply to injustice. my observations or queries categori­ cally. All he did was to give comments. In the course of my profession, I I am saying that the Assistant Minister have found it quite difficult when the was trying to evade the issue. law is uncertain. In fact, if the law is not flexible, if it is certain, there is a Sir, on Clause 15, if the Honourable definite issue, then we are helping the Assistant Minister had listened care­ judges. I am sure, Mr Chairman, Sir, fully to what I said last Saturday, he that by making the law so uncertain, would have appreciated that I was indefinite, we are not helping the quite concerned about Clause 15 in judges. On the phrase, "propriety, or regard to proceedings in camera. I was for other sufficient reason" a judge is not, in particular, concerned about confronted with the issue as to whether Clause 15, sub-section (1), because it he is going to clear the public out of was quite obvious, and everybody the Court or not, and he has not got knows that "The place in which any a yardstick to guide him to decide. Court is held for the purpose of trying any cause or matter, civil or criminal, For instance, Sir, let us take the case shall be deemed an open and public of an offence under the Road Traffic Court ....". It is quite obvious that Ordinance. There, if a man is convicted the place which is declared as a Court for a motoring offence—say, incon­ is an open Court and the public has siderate driving or negligent driving— got the right to attend such hearing. the law says that once he is convicted My point was not concerned as to his licence must be endorsed unless for whether it was a public Court, but it special reason, then in which case the was in respect of the proviso after magistrate can omit to endorse the Clause 15. There it is stated: licence. Here, Sir, the special reason is "Provided that the Court shall have power for the purpose of the Legislature, to hear any matter or proceeding or any when it introduced the law, to give part thereof in camera if the Court is some discretion to the Court in respect satisfied that it is expedient in the interests of endorsing a licence or cancelling it. of justice, public safety, public security or propriety, or for other sufficient reason so That man can carry on his profession to do." of a taxi driver, until it was decided by the Court of Appeal, if the magis­ I was concerned on the two issues. In trate was not sure what are the suffi­ other words, the Court could order the cient reasons—and there are instances public to get out of the public Court, where the Court did not enter an for which they have the right to hear; endorsement on the licence. Despite the and on any of the last two grounds fact the reason given was special "or propriety, or for other sufficient reason—for instance, like inconvenience, reason so to do", if the judges thought hardship are special reasons—later on it fit for sufficient reason, then they this was ruled and this was brought to can, in fact, ask the public to go out— the Court of Appeal, where it was and that power is very wide. decided that that was not one of the Sir, I was concerned because the reasons. So it becomes law. In other power is so wide. I was not trying to words, we are giving a loophole in this 2401 16 DECEMBER 1963 2402

Bill to the judges to decide themselves Mr Chairman, were not present on that later on what are the "propriety or day: other sufficient reasons". It might take "15. (2) A Court may at any time order time and if anybody take care to that no person shall publish the name, address or photograph of any witness in appeal, does it mean the law will be any matter or proceeding or any part thereof hanging and undecided? Until such tried or held or to be tried or held before it, time it might take years; it might take or any evidence or any other thing likely ten years; or it might take such time to lead to the identification of any such witness; and any person who acts in con­ until our Assistant Minister may not travention of any such order shall be liable be living in this world. to imprisonment for a term not exceeding three years or to a fine not exceeding five It is most unfortunate that the House thousand dollars, or to both such imprison­ is not represented by a Minister of ment and fine." Justice as it was at one time once. If I stated in regard to this sub-clause that I remember correctly, when the late if this is passed, then any judge or a Minister of Justice was in this House, judicial officer can order any reporter there was a query from this side of the not to publish the names of any witnes­ House and the reply given was right ses and then we have no freedom of to the issue with dignity and courtesy. of the Press. I did comment about the But, unfortunately, the Assistant Minis­ conviction, and I personally believe ter was not in the House, because he that the period of three years is very was not an elected Member and, as harsh. But the Assistant Minister did far as I know, he is not an elected not reply to that. I say that a reporter Member even now. It is unfortunate may inadvertently publish the name that there is no Minister of Justice in of a certain witness in a trial and then the Government even to this moment. he can be sentenced to three years' imprisonment. Tun Haji Abdul Razak: Sir, on a point of explanation, the Prime Minis­ Sir, I will deal with Clause 46 when ter is the Minister of Justice at present. we come to that stage later. Enche' Peter Lo Su Yin (Sabah): Wan Mustapha bin Haji Ali: Thank Mr Chairman, Sir, I am concerned you. Sir, we had a separate Minister with Clause 14 of the Bill on which of Justice at that time. Now, we do the first speaker commented and asked not have a separate Minister of Justice, for an amendment in terms of allowing and we know very well that the Prime thereby Sarawak advocates to practise Minister is quite a busy man and he in Sarawak and Sabah as those who just delegates to somebody who is not are practising in Sarawak. As I under­ responsible. stand the position, Clause 14 speaks HONOURABLE MEMBERS: NO! of enrolment of advocates. It is not necessary, therefore, to seek any Mr Chairman: I do not think that amendment to this Clause because, as has anything to do with this Clause it stands, the Bill preserves the very at all! essence or the status quo of the practice in Sabah and Sarawak. That Wan Mustapha bin Haji Ali: Sir, is to say, if an advocate is already another point from the reply given by enrolled in Sarawak, he is auto­ the Government is that this Clause is matically entitled to practise in Sabah rather in conformity with the existing and an advocate who is enrolled in law. If it is in conformity with the Sabah is likewise entitled to practise in existing law, why do you take the Sarawak. This is so, and there is no trouble of putting this Bill then? question of making any amendment to Sir, I remember that last Saturday this Clause. I did comment on the sub-clause (2) As regards alterations to the Bill to of Clause 15, because this sub-clause permit advocates from other Malaysian is directed against the Press, against States to practise in Sabah or Sarawak, the reporters. With your permission, that I fear is a matter which can only Sir. I would read it again because you, be done with the consent of the State 2403 16 DECEMBER 1963 2404

Legislatures. That is, in fact, one of So, it is rather important to clarify as the safeguards provided in the Inter- to whether or not the rules being Governmental Committee Report. I changed in November would be think the Honourable Assistant Minis­ covered by clause 16. The point I ter will agree with me. wish to make here, Sir, is that although there may be powers given to the Enche' Stephen Yong Kuet Tze court to make rules, unless the rules (Sarawak): Mr Speaker, Sir, unfortu­ are made no rules would be in nately I was not here when clause 14 existence. So I think it is important that was debated. I think the principle that at the same time as the Act coming the first speaker wished to put forward into force rules of court should be to this House was that there is only made under the Act immediately. That one High Court in Borneo and there­ is to say, rules should now be prepared fore there is no necessity for this pro­ so that one would not find the situation vision where persons enrolled in one of having the Act—the power—but State—say, in Sarawak—which is under without the rules. the same Court of Borneo, will have to get themselves enrolled in Sabah which Enche' Abdul-Rahman bin Ya'kub: is also under the same Court of Borneo. Mr Chairman, Sir, first with respect I think if some amendment were made to the observation made by the to it which would in fact preserve the Honourable Member for Tanjong status quo, that is to say, combining regarding the status quo in Sarawak, the two sub-clauses (3) and (4), that I have already ascertained the true would meet the situation that we now position in Sarawak and in Sabah. have. Yesterday I discussed the matter with my Honourable and learned friend There is one enquiry which I would Mr Peter Lo, who has spoken just now, like to make, Mr Speaker, Sir, of the on the position in Sabah and I also Assistant Minister. It is on rules of discussed the matter with the Acting court under clause 16. Naturally, the Deputy Registrar of the High Court in Court must have power to make rules Sarawak (I think he is called Assistant and since this Bill, if passed, does not Registrar now). The position in Sara­ come into effect until some later date, wak is that an advocate is entitled to therefore, the rule making power will practice there if he is enrolled as an not arise until this Bill has been passed. advocate in Sarawak. The same pro­ Now I wonder whether the Assistant visions apply in Sabah. In many cases, Minister is aware that at the moment if not all, the advocates of Sabah are the rules of court in Sabah and in also enrolled as advocates in Sarawak Sarawak have already been changed and there is no difficulty in getting recently by Order-in-Council or by the enrolment in that respect. So it is rules contained in the Courts Ordi­ therefore really not necessary to nance and one wonders whether the combine, as my Honourable friend rules now prevailing, that is to say the from Sarawak Mr Stephen Yong sug­ rules now adopted by the Court in gested, sub-clauses (3) and (4) of Sabah and Sarawak, are really the clause 14. The position is that unless rules obtaining in the High Court in an advocate is enrolled as an advocate Malaya. Unless one clarifies this posi­ in Sarawak, he cannot practice in tion one may find oneself rather Sarawak, and similar provisions apply confused by this, because there are in Sabah. Therefore, the present clause cases happening, particularly in out- is sufficient. stations in Sarawak, where there are no court registry, people naturally With respect of clause 15, Mr Chair­ used the old rules, but were told that man, Sir, I really do not want to those old rules would not apply reply to some unnecessary remarks because since November this year the made by the Honourable Member for new rules, that is the Malayan High Kelantan Hilir. I would like, however, Court rules apply. I think at least in to remind him again the provisions of one case because of this a claim in section 101 of the Courts Ordinance, Court was caught by limitation period. 1948. Section 15 (1) is really taken 2405 16 DECEMBER 1963 2406 from that. I will read the proviso to Hilir has heard of that famous case section 101 of the Courts Ordinance, in England—Dr Adam's case. I am 1948. It says— not a practising barrister now, but I "Provided that the Court of Appeal, the did hear of that case, as a result of High Court and any President of the which, a Commission was set up to Sessions Court or First Class Magistrate study the problem whether or not it shall have power to hear any matter or was necessary in certain cases to proceeding or any part thereof in camera if in the opinion of such Court, President exclude members of the public from or Magistrate it is expedient in the interests the Court. And it was highly recom­ of justice or propriety or for other sufficient mended that in certain cases, for reason so to do." example, the case of a rape, matters If one reads the proviso to clause 15 believed by the Court to be so of the Bill, Sir, the same wordings prejudicial to the public if they are appear there. Again I would say that disclosed, the Court will normally there are many things in law which exclude members of the public. And are not clear, things like "in the many other instances can be quoted. interests of the public". What consti­ Regarding clause 16 of the Bill, it is tutes the interests of the public? It a clause, as is clear from the wordings, depends on the circumstances of the which gives the power to a Committee case. Therefore, we must leave it to set up under the Bill to make rules for the Courts to decide. Human beings the purposes mentioned in that Bill. are not perfect. They cannot always I must admit I am not aware that the be 100 per cent precise. rules which were in operation several With respect to the observation by months ago in Sarawak and Sabah my Honourable friend regarding the have already been amended for appeal Bill not having been presented by the or altered in any other way by Orders- Minister of Justice and the unfortunate in-Council. In any case, if by Orders- thing that I was not here years ago, in-Council my friend from Sarawak obviously I could not be here even if meant the Orders-in-Council made I had wanted to. But one point I under the former Courts of Judicature would like to make clear, Mr Chair­ for Sarawak, Sabah and Brunei, then man, Sir, is that I am as much an those Orders do not apply. But if they elected member of the Dewan Ra'ayat had not been changed, if they are still as any member from Sarawak and in operation, clause 16 of the Bill does Sabah is (Applause). And I am as not in any way seek to affect it until much an elected member of this Dewan the rules are amended. The Clause as the member for Kelantan Hilir is. gives power to the Rules Committee to make rules and I can say at this Regarding the imprisonment men­ stage that it is, of course, in the tioned in sub-clause (2) of clause 15 of interests of the practitioners, of the the Bill, Mr Chairman, Sir, that is the courts and everybody concerned that maximum punishment which can be all the rules relating to the High Court awarded. It does not mean that in all and the Federal Court should be cases the Court will impose three years' uniform. One can only do that after imprisonment. We must allow the having studied all the various provi­ Court to have a certain amount of sions in Sabah, in Sarawak, in Malaya latitude. If the case is a grave one, the and in Singapore. Therefore, we must Court may consider it in the interests leave it to the Rules Committee to of justice to impose the maximum work out all the details; it is not punishment. But only in very excep­ possible for this House to go into the tional cases will the Court do so. So, various details. Any representation again, we must leave some latitude to which the Honourable Member or the Court to impose the punishment. members of practising advocates in As regards his observation regarding Sarawak would like to put forward to the freedom of the Press, clause 15 (2) the Government with respect to these does not seek to curtail the freedom rules would be very welcome. They of the Press in any way. Surely my could submit their representation to Honourable friend from Kelantan the Rules Committee. 2407 16 DECEMBER 1963 2408

Clauses 11 to 20 inclusive ordered to of the judges to pronounce judgment in stand part of the Bill. the normal way? That, is what I would like the Assistant Minister to explain. Clauses 21 to 40 inclusive ordered to stand part of the Bill. Enche' Abdul-Rahman bin Ya'kub (Sarawak): Mr Chairman, Sir, I Clauses 41 to 45 inclusive ordered to thought I had alread explained this stand part of the Bill. sufficiently on Saturday last—Clause 46 of the Bill. I wall not say I did see Clause 46— it, but I would say that I did see the Wan Mustapha bin Haji Ali: Mr Explanatory Statement in the Bill. I Chairman, Sir, I was referring to am really surprised that a learned and Clause 46 the other day and I had practising advocate could interpret hoped that the Honourable Assistant Clause 46 as an attempt to preclude a Minister could enlighten me. However, Court from pronouncing a judgment. according to the reply given by the Sir, Clause 46 seeks to do nothing of Honourable Assistant Minister, he that sort. What is a declaratory judg­ stated that if I were to refer to the ment? When the Court makes a decla­ Explanatory Statement then the whole ratory judgment, it is pronouncing a thing would be quite clear. Well of judgment. course, I did see the Explanatory State­ In fact, as my Honourable and ment before I spoke last Saturday, and learned friend for Kelantan Hilir must with your permission I would like to be aware under so many Acts, in actions read: against or by the Government, the "Clauses 45-49 deal with the original Court will not make an order, for jurisdiction of the Court and are conse­ example, for specific performance, i.e. quential on the Malaysia Act except Clause will not force the Government to do a 46 which is based on the corresponding section of the Government of India Act, thing, but will make a declaratory judg­ 1935,"— ment, and then it is left to the Govern­ ment to carry out the judgment. It must it is stated here Clauses 45 to 49 be presumed that the Government of except Clause 46, which is based on the country will abide by the decision the corresponding section of the of the court. I need only refer him again Government of India Act, 1935—and it to the Government Proceedings Act of "provides that in any action between States this country; I need only refer him or between the Federation and a State the again to the Crown Proceedings Act, Court shall not pronounce any judgment other than a declaratory judgment." 1947, of the United Kingdom; I need only refer him to the Crown Proceed­ I was referring to Clause 46, because ings Ordinance, of Sarawak, and various I was concerned that when there is a other Acts which contain the same pro­ dispute between a State and the visions, that is, that in actions by Central Government, or between the a private citizen against the Govern­ Central Government and a State, who­ ment, the Court is only allowed to ever is the plaintiff, then the Federal pronounce a declaratory judgment—it Court cannot pronounce a judgment— is a pronouncement. I regret very much well, I mean, that if a case were taken that he has alluded to the question of to the Federal Court and there is a the Kelantan Government versus the dispute, for instance, between the Federation Government. Kelantan Government and the Federa­ tion Government, and the Federal Sir, I would like to make it clear to Court cannot pronounce judgment, to this House that this Clause was not which Court then are we to take it? introduced in the Bill for the purpose, I am not accusing the Central Govern­ either expressly or as implied by the ment, but my interpretation of this is Honourable and learned Member for that this precludes the Federal Court Kelantan Hilir, of influencing the Court from pronouncing judgment as a result against the Kelantan Government in the of that case—and by passing this action between the Kelantan Govern­ Clause, will it not take away the power ment and the Federation Government. 2409 16 DECEMBER 1963 2410

Mr Chairman: I thought we had Mr Chairman: I cannot tolerate two debated on the policy on the second Members standing and talking at the reading of the Bill on Saturday last: same time. I have warned Members unfortunately, I was not here. It seems again and again that Members should to me that this debate on the clause not stand at the same time. is coming under the policy of the Bill itself. I would ask the Honourable Wan Mustapha bin Haji Ali: I will Member to confine himself to the repeat it. Clause 4 clearly says that when Clause rather than the policy of the there is a conflict between this Bill and Bill itself, because that has been any other written law except the Con­ debated on Saturday during the second stitution, then this Bill prevails. When reading of the Bill. this Bill prevails, then the Crown Pro­ ceedings Act, or whatever Act you have Wan Mustapha bin Haji Ali: Mr in the past will be of no use: and Chairman, Sir, having heard what the Clause 46 says that the judges cannot Honourable Assistant Minister said pronounce judgment except declara­ just now—he says that there are tory judgment. And I am sure that my separate Crown Proceedings Acts—I Honourable and learned friend, the would like to refer him to Clause 4 of Assistant Minister, is aware that a this Bill which says: declaratory judgment is not consequen­ "In the event of inconsistency or conflict tial: I mean the judges never pass a between the provisions of this Act and the judgment; it is just a declaratory judg­ provisions of any other written law other ment just like he would pronounce in a than the Constitution in force at the com­ matrimonial case that the marriage is mencement of this Act, the provisions of this Act shall prevail." null and void. (Laughter). My Honour­ able friend is laughing. I am just quot­ Once we pass this Bill and Clause 46 ing an example. This is a serious matter, is passed, and if I were the advocate Mr Chairman, Sir, and I am not stand­ for the losing defendant I would ing here to waste the time of the House. say, "Your Lordship cannot pronounce judgment against my client"'—whether Mr Chairman: Please proceed. I am acting for the Federal Government or State Government—and I would The Assistant Minister of Commerce read to him word for word Clause 36: and Industry (Tuan Haji Abdul Khalid bin Awang Osman): I am laughing "The Federal Court in the exercise of its because he keeps on repeating ''matri- original jurisdiction under Article 128 (1) (b) of the Constitution in respect of a dispute mony" and quoting it as an example. between States or between the Federation Mr Chairman: Please proceed. and any State shall not pronounce any judgment other than a declaratory judg­ Wan Mustapha bin Haji Ali: Sir, ment." by having this Clause 46, it means Then, where would the judge be? The that the Federal Court cannot pro­ judge will then quote another law to nounce judgment; and if it cannot pro­ pronounce judgment and I would then nounce judgment, then the case will be quote Clause 4 to stop him which pending. I am sure my Honourable reads: and learned friend would be able to "In the event of inconsistency or conflict enlighten this House that there is a the provisions of this Act shall vast difference between a judgment and prevail." a declaratory judgment. A declaratory Where would the law be? Law could judgment means that the judgment not be enforced. would be without effect. Enche' Abdul-Rahman bin Ya'kub: The Minister of Transport (Dato' Will the Honourable and learned Haji Sardon bin Haji Jubir): Mr Chair­ Member state the conflict between that man, Sir, in reply to my learned friend provision and the provision of the from Kelantan Hilir, I would like to Government Proceedings Act with say that we have discussed on policy respect to judgment .... last Saturday. Sir, you let him talk on Wan Mustapha bin Haji Ali: It is matter of policy, but now we are on not conflict .... Clause 46. He did mention just now 2411 16 DECEMBER 1963 2412

that he did see and he did read, but is in favour of a private citizen, it must I am afraid that he did not read the be presumed that the Government of last sentence of paragraph 8 on page the country, any democratic country, 33 of the Explanatory Statement, which will abide by the order of Court. So, says clearly "This is in conformity with really, there is no conflict between the existing laws relating to proceedings Clause 4 of the Bill, read together with against Government". The law which Clause 46 of the Bill, and the existing is going to be enacted is the same as legislation in Malaya, Singapore, Sara­ the procedure in existence now, Sir. I wak and Sabah. Fortunately, he men­ think he is a bit worried because of the tioned that if he was an advocate for a judgment awarded against his client— "losing" defendant—not a "winning" the declaratory judgment of the Fede­ defendant—he would have objected to ration Court recently. But there is an certain things. He quoted as an example appeal and you have already ruled that matrimonial cases, but can any Honour­ out. I think that is sub judice. A able Member in this House quote declaratory judgment is a judgment, an example where one government can but you cannot force the Government marry another government. (Laughter). to stop the establishment of Malaysia Clauses 41 to 50 inclusive ordered to being formed. You cannot get the order stand part of the Bill. of the Court to stop the Government functioning and carry out its responsi­ Clauses 51 to 60 inclusive ordered to bilities towards the public. I think my stand part of the Bill. learned friend should understand that there is nothing that this new legisla­ Clauses 61 to 70— tion is taking out from the existing Wan Mustapha bin Haji Ali: Mr practice of the court of justice. Chairman, Sir, I would like to ask a question of the Honourable Assistant Minister in respect of Clause 61—I am Enche' Abdul-Rahman bin Ya'kub: just wondering whether this will be Mr Chairman, Sir, if I appear to waste superfluous, because this is provided a bit of time clarifying this point, under the normal procedure. For please bear with me for a moment. My instance, under the Criminal Procedure Honourable friend from Kelantan Hilir Code, the judges in the Lower Court or mentioned about Clause 4—reading it, even the High Court could ask for of course, together with Clause 46 of additional evidence. So, I think it is not the Bill. He must have in mind the necessary to have Clause 61. question of declaratory judgment. In his view, it may be in conflict with the Enche' Abdul-Rahman bin Ya'kub Government Proceedings Act, but I (Sarawak): Mr Chairman, Sir, this is have asked him to state in what way provided for in other provisions, in Clause 46 will be in conflict with the other legislations. But even if it is Government Proceedings Act with superfluous, there is no harm in having respect specifically to the question of that Clause in the Act. It is much easier declaratory judgment. I would like to for a practising lawyer to find it, if make it clear now that under the there is provision in the Judicature Act. Government Proceedings Act, a private Then he can rely either on that pro­ citizen in an action against either the vision, or on other provisions. State Government or the Federal Clauses 61 to 70 inclusive ordered to Government, cannot obtain a judgment stand part of the Bill. for, e.g., specific performance—in other words, by obtaining that sort of judg­ Clauses 71 to 82 inclusive ordered to ment, the Court can force the Govern­ stand part of the Bill. ment to perform a certain act. But First Schedule ordered to stand part what the Court can do is that it will of the Bill. make a declaratory judgment either for or against the Government. If it is Second Schedule ordered to stand in favour of the Government, then the part of the Bill. losing party will have to follow the Bill reported with amendment: read Court's order. Similarly, if the judgment the third time and passed. 2413 16 DECEMBER 1963 2414

THE ADVOCATES AND THE LOCAL AUTHORITIES SOLICITORS (AMENDMENT) BILL (CONDITIONS OF SERVICE) BILL Second Reading Second Reading The Assistant Minister of the Interior Enche' Cheah Theam Swee: Mr (Enche' Cheah Theam Swee): Mr Speaker, Sir, I beg to move that a Bill Speaker, Sir, I beg to move that a Bill intituled "an Act to regulate the condi­ intituled "an Act to amend the Advo­ tions of service of officers and servants cates and Solicitors Ordinance, 1947" of local authorities and to provide for be read a second time. a provident fund or funds for such officers and servants" be read a second Sir, this Bill seeks to amend sub­ time. section (2) of section 25 of the Advo­ cates and Solicitors Ordinance, 1947, Sir, pursuing the desirability of in order to provide that an Advocate ensuring uniformity of law and policy in matters relating to local government, and Solicitor shall not be issued with the Government considers it essential a certificate authorising him to practise that conditions of service of officers and in the Federation unless he has satisfied servants of local authorities should, in the Registrar that he or any other so far as it is possible, be made uni­ Advocate and Solicitor by whom he is form. For example, there should be employed has complied with the provi­ similar qualifications for appointment, sions of the Ordinance or of any rules salary scales and discipline of local made thereunder, relating to the keep­ government officers throughout the ing of accounts. country. Failure to comply with the provisions This piece of legislation falls within of the Ordinance or with any of the the scope of Clause 4 of Article 76 of provisions of the rules made thereunder the Constitution, and I would like will result in a refusal to issue a certi­ further to inform the House that the ficate to the applicant. Sir, I have terms of this Bill have, in accordance mentioned "Federation", but, in fact, with Article 95A of the Constitution, this Bill will apply only in the States been discussed in the National Council of Malaya. It does not apply to Singa­ for Local Government and agreed to by pore, Sabah and Sarawak. I would also the Council. like to inform the House that the Bar Council of the States of Malaya has Clause 5 (1) empowers the Minister been fully consulted and it has no to establish a provident fund or funds objections to this Bill. for the benefit of officers and servants of local authorities. Sir, in conformity Sir, I beg to move. with the principle that the local autho­ The Minister of Health (Enche' rities should enjoy maximum autonomy Abdul Rahman bin Haji Talib): Sir, wherever possible, this Bill, other than providing a uniform practice, does not I beg to second the motion. encroach upon the powers and duties Question put, and agreed to. of local authorities. Bill accordingly read a second time Sir, I beg to move. and committed to a Committee of the Tuan Haji Abdul Khalid bin Awang whole House. Osman: Sir, I beg to second the motion. House immediately resolved itself into a Committee on the Bill. Enche' V. Veerappen (Seberang Selatan): Mr Speaker, Sir, I wish to Bill considered in Committee. make a few observations on this Bill. (Mr Speaker in the Chair) First of all, I would like to welcome the move to provide uniformity for the Clauses 1 and 2 ordered to stand staff and servants of the local autho­ part of the Bill. rities. However, I am afraid that the Bill reported without amendment: objective which the Government sets read the third time and passed. out to do in this Bill may not be 2421 16 DECEMBER 1963 2422 Undang2 ini di-luluskan, manakala example, depends to a great extent on hendak di-adakan peratoran2, saya the ideological view points of the local harap mendapat perhatian atau pun authority. If a particular local authority pandangan daripada wakil2 Majlis is inclined to be more sympathetic to supaya dapat-lah Yang Berhormat the working class, it is only natural Menteri Dalam Negeri mengkaji dan that the salary schemes and conditions dengan yang demikian dapat-lah di- of service of that particular local autho­ laksanakan dengan sempurna-nya. Se- rity will be inclined to be much better kian-lah, Tuan Yang di-Pertua. than in the case of a local authority Enche' Tan Phock Kin: Mr Speaker, which is not dedicated to such a cause. Sir, I shall be very grateful if the So, Sir, the Minister will have a great Honourable the Assistant Minister of deal of difficulty trying to reconcile the Interior can give clarifications to matters. I wonder whether in making the various points which I propose to such a reconciliation he will have to bring up with regard to this Bill. As my take into consideration the best condi­ Honourable friend from Seberang tions of service and the best salary Selatan just said, as far as the Bill scheme to be incorporated into his rules proposes to ensure uniformity in the so that nobody will suffer. For example, laws of local governments pertaining to if a clerk in one of the municipalities employment and conditions of services is getting a salary scale or conditions of officers, we must say that the objec­ of service better than all the other local tives are laudable. But at the same time authorities, then in making rules for I must point out to the Honourable uniformity the objective should be to Assistant Minister concerned that there improve the conditions of service and are a great many practical difficulties the salary schemes of all the other confronting him in utilising these local authorities. Whether that is powers to make such rules. It must be practical as far as the other authorities realised that there are various local are concerned is a problem for the government authorities in this country Minister and also a problem for the and they have been developed in va­ local authorities concerned. So with rious ways, each motivated by its own the passage of this Bill obviously we ideas of right and wrong and each must get an assurance from the Minis­ providing different conditions of ter as to whether it is his intention to employment and different qualifications do that, or whether his intention is for officers with regard to the different merely to provide uniformity because type of jobs. So bringing about unifor­ of his concern that certain more pro­ mity is indeed a most difficult job on gressive local authorities are paying the part of the Minister concerned. He too generous a salary to their em­ will have to take into consideration the ployees, or are giving too good condi­ fact that people in the same category tions of service, so much so that as of work are paid different salaries— far as the other authorities are some are paid more and some are paid concerned, which are perhaps under less. I must point out that a joint the control of another body of political consultative committee of all the muni­ opinion, it may be used politically cipalities has been formed many against them. So, Mr Speaker, Sir, it months ago, and one of the functions is my hope that the Minister concerned of this joint consultative committee is will give a very clear clarification on to find common grounds of agreement that. with regard to service matters—employ­ ment, salary scales and other matters. On the question of qualifications, In the course of discussions, various some municipalities, being very prac­ practical difficulties were faced by the tical, have already decided that as far people concerned, because as we are no as qualifications for certain posts in doubt aware the financial position of our the municipality are concerned, they municipalities differs; and even if the would accept graduates from Chinese, financial position does not differ, the Malay and Tamil schools for employ­ decision to increase the salary of a ment in such positions as hawkers' particular grade of workers, for inspectors which require a knowledge 2423 16 DECEMBER 1963 2424 of the local languages, and I think is because they do not pay salary graduates from the Malay, Chinese and scales that will attract people with Tamil schools are the most appropriate such qualifications. Those are pro­ people for such positions. But in the blems which I think the Minister other municipalities there is no such concerned must face. I do not know provision. In fact, I think most of the whether the Minister has considered municipalities, with the exception of all these problems seriously. If he has, the City Council of Penang, adhere he should enlighten us as to what he strictly to the old colonial qualifica­ intends to do, because very often we tions in insisting that every employee see Ministers introducing Bills to this must have a School Certificate, without House putting forward certain propo­ any amendment to provide for the fact sals in principle and yet they had no that Malay has become the national idea as to how they were going to language and they must be proficient implement them. I hope the Assistant in the Malay language, or any other Minister concerned is not in that amendment of that nature to keep the category. I hope that he is in a posi­ local authorities in line with the pro­ tion to enlighten this House as to his gress that we have made since indepen­ plans of implementing this particular dence. However, Sir, those are points Bill which is a very important Bill, which I hope the Minister will because if the Government is unable consider. to carry out the objectives enunciated in the Bill there is no point in passing On the question of fees, salary scales the Bill. The Bill should only be and matters like that, some municipa­ passed if the Government is able to lities are more liberal than the others implement it; and to be able to imple­ and I must point out that as far as the ment it the Government must have calibre of employees that the munici­ plans; and they must tell this House palities can get, it is dependent a great how it is going to overcome all these deal on the scale of salaries they can problems. Similarly with the provident afford to pay. fund. So, for the purposes of uniformity We support the principle, the idea certain problems will arise. I do not of having a common provident fund, know what the Minister has in mind but here we must consider that the new with regard to this particular pro­ scheme must in no way be inferior to blem—whether, as I have mentioned the present provident fund scheme before, he will adhere to the highest that is going on in all the various salary scale as the common factor for municipalities, and I hope that the every municipality. But there again Honourable Assistant Minister will there will be practical problems. Can have something to tell us when he the other authorities afford it? If the winds up the debate. other authorities cannot afford it, how can we have uniformity unless uni­ Enche' Geh Chong Keat (Penang formity is taking an average? And if Utara): Sir, we, especially Members an average is taken, a few other pro­ here who are also members of some blems arise. The first problem is, is it local councils, welcome this Bill, fair to existing officers? Secondly, if especially in respect of the point in the Minister is going to overcome this regard to the provision of provident problem by saying that it will affect fund for officers and staff. Sir, speaking only new employees, even on that on the terms and conditions regulating amendment we must question him as services and salaries of staff and ser­ to whether with this amendment he can vants in the local councils, I wish to get the same quality of employees for seek some clarification from the the various services. Examples of this Honourable Minister, who moved this sort of thing happening in the Central Bill, as to whether the General Orders Government is testimony to the and the General Financial Orders urgency of this problem. The fact that apply to the local councils. As far as the Central Government is unable to I know, some of the local councils have get sufficient doctors and accountants moved resolutions to adopt the 2425 16 DECEMBER 1963 2426 General Orders and the General employees in the form of engineers, Financial Orders; some did not and town planners, as well as medical and they more or less apply the General health officers. In the case of the latter Orders and the General Financial officers, we have the good ones, we Orders, where applicable, with a have the unco-operative ones, and it certain amount of flexibility. will be a problem for local councils to tackle these unco-operative ones. Sir, Speaking on the conditions of service we have one officer in the Penang of officers in the local councils, I Island Local Council, who looks after would like to say that they have got the Planning Section. Plans before quite a lot of difficulties in respect of being submitted to the local councils engaging officers. I hope a provision must go through the State Engineering will be made here for the setting up of Department and then they go through a Public Services Commission for a process; after a week, a month or employing officers for the local two, those plans are sent back. Now, councils. As it is, most of the local we have the problem of co-ordination authorities find it difficult to approach between the executive engineers and the the State Government to employ local councils, and these executive officers above a certain category—say, engineers in turn have got to co-ordi­ with a salary of $300 per month. Under nate with the State Engineer, resulting the existing Municipal regulations, such in plans being delayed for two or three appointments require the confirma­ months, sometimes longer. We wonder­ tion of the State Government. Even ed why such delay should happen, though the local councils have taken and we traced the cause to the the necessary steps and complied with executive engineer, who is a bit the procedures for employing officers worried, or a bit cautious, about as secretaries and engineers, they approving the plans as he had to encounter delay at the State Govern­ submit them in turn to the State ment level, as a Public Services Engineer—and this State Engineer Commission has to be set up to employ looks after the taking over the roads such officers. As an example, where I and conditions of the roads, and he come from—the State of Penang—the also stipulates that unless these conform Rural District Council of Penang to the specifications to the Jurutera Island had made the necessary arrange­ Kerja Raya, those roads would not be ments and procedures to approach the taken over, even though they are made State Government for engaging a up—that is the flexible point where the Secretary, but even then we find it State Engineer overrides the local difficult to get the Penang State council even though the council Services Commission to interview approves the plan, as the State candidates for us—and this we under­ Engineer is not prepared to take over. stand because it is a separate unit and a separate Services Commission must Sir, the problem of the State be set up. Engineer in the State of Penang is really sometimes quite embarrassing. Sir, in the local councils, the Road plans that have not been conditions of service of officers is approved by the local councils, or have really a very critical subject. We have not been submitted to the local there several classifications of staff— councils, have been approved by the we have the General Clerical Service, State Engineer without the knowledge the State Service and local council of the local councils, who are the local employees and above all we have authorities governing or approving the technical advisers who are being plans for houses and for roads in the seconded to the local councils. Now, housing schemes. the problem usually arises from seconded advisers to the numerous Sir, according to this Bill, the local councils. Disciplinary actions section only provides for the exercising under the General Orders apply only of disciplinary control over officers in to the local council staff, but not certain local councils. There is no technical advisers, who are State control over seconded technical 2427 16 DECEMBER 1963 2428 advisers. So, in this respect I wish the have been made to understand by the Minister would make provision for a officers of the State, that if such pay­ certain form of control by the local ments are not reimbursed by the Local councils over the officers seconded, Authorities, the officers signing the otherwise it may be a case of local slips would have to make good the councils approving plans with the payments. So, in supporting this Bill State Engineer, or the technical for the benefit of the employees, I hope advisers, refusing to sign the plans, or the conditions which have been recom­ the State Engineer refusing to recom­ mended by the Local Authorities mend to the State Government to take would be facilitated by the Minister, over the roads, when a local council as he has moved this Bill. Thank you, has approved it according to the Sir. relevant section of the Local Council Enche' D. R. Seenivasagam (Ipoh): Ordinance by-laws—in other words, Mr Speaker, Sir, whilst uniformity of some plans have been approved by two service and conditions of service in technical advisers, the roads or the local authorities is a desirable one, this plans have to be approved to save Bill must be seriously considered further embarrassment to some local before; and any of the provisions, councils. I hope the Minister will make enabling provisions to be made to the necessary provision in this Bill as regulate terms of service and other far as the control over the technical attendant matters, must be very, very advisers is concerned. carefully thought out and planned. If Sir, the Bill has indicated the this is not so done, there is no doubt provision of a provident fund for the that upheaval will be caused in the employees which my Council, that is local authority level. the Penang Island Council, has been Mr Speaker, Sir. local authorities in working on it for a long time and is this country are largely divided into now awaiting approval. However, there Municipalities, Town Councils, Town is one point which I would like to Boards and Rural District Councils. bring to the attention of the Honour­ Sir, I would like to refer to the able Minister, and that is with regard Explanatory Statement which speaks of to medical facilities. In the Local uniformity and says this—the fourth Councils, even though the budgets have line in the Explanatory Statement: been approved and provisions made to "It is considered desirable that, with a look after the employees, such as view to ensuring such uniformity, the condi­ providing for a provident fund, the tions of service of officers and servants of money could not be expended due to local authorities should, insofar as it is the fact that the Council has not got possible to do so, be made uniform, so that, the permission to spend its money on for example, the qualifications, etc . . ." medical facilities. Some Councils have Mr Speaker, Sir, if it is the intention been embarrassed and some chairmen, of the Bill only to do so, so far as it too, have been embarrassed. When is possible to do so, then it is a labour staff have to be employed, they desirable Bill. Now, Mr Speaker, Sir, have to be sent for medical examination how is that to be done? For example, under their terms of employment, and there is now in existence a Municipal under their terms of employment again Consultative Committee consisting of they could not go to outside medical representatives from all Municipalities practitioners for examination but in the Federation. That Committee has through Government source, i.e. the been trying very hard to get some General Hospital. Embarrassment is degree of uniformity on the question of also caused to Councils when Chief salary scales alone, and even that has Medical Officers refused to examine not been possible due to the different the new employees because of outstand­ financial implications of each Munici­ ing bills. Some senior officials—the pality. Similarly, I suppose in Town Secretary, Assistant Secretary, or the Councils the same problem does arise, Chief Clerk—are scared to sign the because finance is the important point medical examination slips requesting in regard to the uniformity of service. for medical examinations, because they And again, another point of very great 2429 16 DECEMBER 1963 2430

importance is that it would not be from State Governments or Federal possible to implement this without Departments, who are seconded to consultation with the local authorities local authorities, paid by local authori­ in the Federation and with any union ties, but only as seconded officers? Are that exists within the Municipalities any regulations to be made to govern and the other local authorities, which their continued service with the local are vitally concerned with salary scales authorities; or is it the intention that and terms of service. Therefore, my those seconded officers should be suggestion, on this Bill, is that the removed from local authorities, or is Minister responsible should, when it the intention that seconded officers making these regulations, make it a should be given the alternative choice very definite point to get consultation, of becoming direct employees of local with ample time for such consultation, authorities, or reverting back to their with all local authorities in the original employment with either the Federation, and with all unions repre­ State or the Federal level? These are senting monthly-paid staff and daily- matters with which we seek clarifi­ paid staff within local authorities. If cation. you do not do that, then most certainly Enche' Stephen Yong Kuet Tze: Mr there is going to be very serious Speaker, Sir, although this Bill does repercussion not only on the adminis­ not apply to Sarawak and Sabah, there trators of local authorities, but on the is a point of general public interest employees themselves, because there is which I think I ought to mention. I a great degree of variance now in local refer, Sir, to Clause 5—provision for authority terms of service—and even provident fund. consultative committees and the very Mr Speaker, Sir, I think the intention small number of committees have not for the setting up of the provident fund been able to get uniformity on that is clear, and that is, to give the officer one point alone. Therefore, Mr something to fall back on when he re­ Speaker, Sir, my appeal is that no tires, and also for his dependants. It is provision should be implemented obvious—I think that is the intention— without thorough consultation with that funds due to him cannot be local authorities. assigned or attached by anybody. Mr Speaker, Sir, then, again, you However, I observe that the officer can have the question of salary scales. It by will will away the money that is must be so implemented that the due to him; and I think there are no present salary scales are not affected lacking of cases of middle-aged married to the detriment of any employee of a men who suddenly took fancy to some local authority. Similarly, with regard young thing and willed away to their to qualifications, each local authority new objects of affection. I think there is an entity of its own, and conditions should be a provision, if the intention and circumstances are different. There­ of the Bill is to be carried into effect, fore, I am glad to see that the that is to say, for purpose of providing Explanatory Note says only "insofar for the dependants of the officers, to as it is possible to do so." the effect that he cannot will away all this money. I say so, Sir, because I do Mr Speaker, Sir, then, you have know that in other Western countries another category of officers known as one cannot will away all his properties; contract officers. Is it the intention of and if he does so, one-third of it must this Bill to interfere with whatever remain with his dependants or his contractual obligations entered into by widow. Therefore, I think when we local authorities with these contract have a provision for a provident fund officers? Perhaps, the Honourable the looking after the retired officer and his Assistant Minister can tell us. Is it the dependants, the proper thing here intention of this Bill to interfere with would be for the insertion of a provi­ contract officers of Municipalities and sion where, if he were to make a will, local authorities? no more than two-thirds could be Then, what is the position going to willed away from his dependants and be with regard to seconded officers his widow. 2431 16 DECEMBER 1963 2432

Enche' Cheah Theam Swee: Mr tend to scale down salary scales. We Speaker, Sir, I am glad to note that in are aware that the Consultative Com- all corners of this House there is this mitees of the Municipalities of Kuala desire for uniformity in the case of Lumpur, the Federal Capital, and Ipoh local governments. and of the City Councils of Penang and Malacca have been working at As we all know, Sir, the local great pains but they have still been authorities have grown and developed unable to come to a definite form of all this while in their own directions. salary scales with regard to the various Perhaps, it might be suitable to quote groups of employees. We fully realise a very old Chinese saying which says, this and I would like to assure the "if you want to start a journey of a authorities that there is no intention thousand miles, you have to start it by whatsoever on the part of the Govern­ one single step." I fully realise the ment to interfere with the status quo at difficulties that lie ahead if we sit down the moment of the existing salary scales to work out the regulations that we that prevail and if at all there happens have to make under this Bill, and I to be any interference, it would be only only hope that those local authorities after agreement with the Local concerned would give us the fullest Authorities concerned. However, the co-operation when we get down to Local Authorities themselves might work out the details of the regulations think it worthwhile that a change which we are going to make under this should be made. Bill. With regard to seconded officers Well, Sir, the Honourable Member from the State Governments to local for Tanjong has said that he hopes authorities, this would be a matter that we should be able to tell him the which, I think, cannot be said to fall plan that we envisage now as to the within this Bill at the moment, and it making of the regulations under this will take some form of examination Bill. Sir. as I have said, we have got before we come to a decision as to to start at some point, and it is only whether or not seconded officers from after the passage of this Bill that we the State Governments to local authori­ can get started. I would like to assure ties can fall under the absolute control the House and all the local authorities of the local authority or in what form concerned, or that might be concerned, the conditions of service should be that the Government would give them regulated. I assure the House thai we the fullest consultations possible, con­ can look into this and we can consult sultations to the very maximum. We the State Governments by way of the fully realise the complexities that are National Council for Local Govern­ involved in this question of making ments. regulations with regard to conditions of service, salary scales, etc. I sincerely The Member from Penang raised the hope that that co-operation from the question of, perhaps, setting up of a local authorities—whether they are Public Services Commission with controlled by the Alliance or by any regard to the employees in the local other Opposition Parties—would be authorities. Sir, I have been looking forthcoming. into this question of a Services As the Honourable Member for Ipoh Commission which might eventually—I has pointed out, this Bill seeks to do not know how long it will take— provide uniformity in so far as it is come out in the form of the Local possible to do so. Authority Services Commission such as, perhaps, those in countries like The Honourable Member for Tan­ India. I think this will take quite some jong did raise some very legitimate time before we can really come to- this points, and I fully agree with him that stage and it all depends on how we it would be a cause for upheavel if, in can get about with the beginning of the making of the regulations and in this Bill. Of course, that would be the the provisions of uniformity, instead of most desirable objective and if we can scaling up the salary scales, we might all work together, then not in the too 2433 16 DECEMBER 1963 2434 distant a future we can graduate to a to control a person's desire to make state of affairs whereby we can work whatever will that he chooses to make. under the system. But, nevertheless, I quite see the point The Honourable Member for Sebe- of view of the Honourable Member rang Selatan raised the question of the from Sarawak, Mr Stephen Yong, in forfeiture of a contributor's contribu­ that there might be employees of local tions to the provident fund under authorities who because of certain cir­ Clause 5 (7). The provision therein gives cumstances do not eventually provide absolute discretion, no doubt, to the for their own actual dependants. But local authorities to forfeit the contri­ that is a question more of morals rather butions of the member so dismissed, than a thing which legislation can but it also provides that the local control. However, we would bear this authority can forfeit any part thereof, in mind and if it need be we will make not necessarily the full amount. In our the necessary amendments. However, desire for maintaining a high degree of as I have said, I doubt whether it autonomy, I think it would be desirable would be a desirable thing unless we to leave it to the discretion of the local can be fully convinced of the need. authorities whether or not they should Sir, I can think of no other points forfeit the whole or part of this con­ that need any further clarification, and tribution. I think it would be a wise before I sit down I would like to assure thing, Mr Speaker, Sir, to leave it at the House and especially the parties that at the moment until we come to that control the local authorities that perhaps a further stage. I hope the in this particular instance we give them Honourable Member for Seberang the fullest possible assurance that there Selatan would agree with me and if any will be full consultations all round. undue abuse on the part of local Question put, and agreed to. authorities is created by this provision, then we can look into the question Bill accordingly read a second time of a further amendment. and committed to a Committee of the whole House. Sir, I think the whole thing really House immediately resolved itself boils down to the question that in the framing up of the rules and regulations into a Committee on the Bill. there must be full consultations. Well, Bill considered in Committee. I do not know the full views of the Local Authorities, especially the views (Mr Speaker in the Chair) of those councils that are controlled by Clauses 1 to 3 inclusive ordered parties in the Opposition and I would to stand part of the Bill. be glad to get an assurance that they would give us the maximum co­ Clauses 4 to 6— operation. With regard to the question Enche' V. Veerappen: Mr Chairman, of provident fund, I can assure the Sir, in my observations as to the diffi­ House that in establishing the provident culties of implementing Clause 4,1 gave fund, either jointly or singularly by as an example in good faith the fi­ local authorities, there is no intention nancial position of the Bentong Town to create conditions which are inferior Council and I do not know why that to that of the provident fund existing matter should have stung the Member at the moment. It is the intention also for Temerloh. Maybe it was because to consult the authorities concerned he is from Temerloh, and he took the and also the Employees Provident occasion to accuse the Socialist Front Fund Board. of negligence. Therefore, permit me, An Honourable Member from Sara­ Sir, to say a few words on this. wak, Mr Stephen Yong, raised a ques­ Mr Chairman, Sir, the Bentong tion under Clause 5 (4) with regard to Town Council became a fully elected the control of a person's desire to will Council, I think, in 1961 and it is only away his monies in the provident fund. a few months ago that the Socialist Sir, in my own mind it is doubtful Front took control of it. The Socialist whether or not it would be desirable Front was accused of negligence, but 2435 16 DECEMBER 1963 2436

I just now said that the State Govern­ happened to be the District Officer, ment bullied the Bentong Town Coun­ realising, or the nominated Council cil. Now I would like to accuse the realising, that this was going to pass State Government of negligence and I into an elected Council it went on a would prove that there was negligence spending spree. In 1959 they budgeted and I am sure the Auditor-General for a deficit of $60,000 and again in would bear me out when I say this 1960 they had another deficit of $60,000 because, Mr Chairman, Sir, prior to when there was a balance of only 1961 before it became a fully elected $55,000. These budgets are supposed to council the Bentong Town Council had be examined by the State Government a surplus of $115,000. But at the and approved by the State Government, time .... but they were never examined but approved. The State Government Enche' Cheah Theam Swee: May I approved a budget that was a deficit know from the Honourable Member budget and if they had to incur on what clause he is speaking? I find it all the expenses, then they would difficult to follow, Sir. not have the money—that was in Mr Chairman: The Bill before the 1960. The Council became elected House is the Local Authorities in 1961, and it was only in 1963 that (Conditions of Service) Act. What is the Socialist Front took over, and only most important is the "conditions of in 1963 was there a balanced budget service". I would like Honourable for the first time in nine years. Members to confine to that subject— that is, on the conditions of service. Mr Chairman: Is it going to be a very long example? Endue' V. Veerappen: I am quite aware of what I am doing and that is Enche' V. Veerappen: Well, I think why I asked your indulgence and the that is quite sufficient to prove my indulgence of this House. I also would point. (Laughter). like to prove that these conditions can Enche' Tan Phock Kin: Mr Chair­ never be implemented until and unless man, Sir, the Honourable Assistant the financial positions of these councils Minister, in the course of his reply, are improved. has given full emphasis to a very Mr Chairman: I must warn you important aspect with regard to Clause again. 4 in that in determining to regulate the conditions of service, he will have Enche' V. Veerappen: I am just consultations with the local authorities. quoting the Bentong Town Council to Those, Sir, are the words expressed in give as an example. this House, and I am sure that every Mr Chairman: I must warn you Minister concerned will incorporate again that we have already debated intention into a Bill. It is very well to the principle of the Bill. We are now say that this is the intention of the in Committee. Will you confine to the Government in passing this particular clause? Bill, but I think that we in the Opposi­ tion and the people of this country, Enche' V. Veerappen: Mr Chairman, are entitled to a more positive Sir, as you will see, Clause 4 (2) (b) assurance, and a more positive assu­ provides for the scales of the salaries, rance can only be found by incor­ fees and allowances. Salaries, fees and porating the intention of the Minister allowances can only be paid from concerned into the body of this Bill. funds, and I am going to talk of funds. So, I would like to ask the Minister Sir, I am going to take the Bentong concerned whether he would consider Town Council as an example, if you moving an amendment to the Bill by will permit me. The Bentong Town incorporating in Clause 4 (1) that, Council, Mr Chairman, Sir, had a "The Minister, after consultation with surplus of $115,000 before it became local authorities and trade unions of fully elected, but for some reason or local authorities, and with the approval other, the previous Chairman, who of the Treasury . . . .", because by 2437 16 DECEMBER 1963 2438 having this incorporated, local authori­ feel, for this part of the House running ties and trade unions of local authori­ right up to the other side of the House, ties will be assured by law that they would be sufficient. will be consulted. This is a very Clauses 4 to 6 inclusive ordered to reasonable proposition motivated by stand part of the Bill. the desire of the Minister himself, and I do not see any reason why the Minis­ Bill reported without amendment; ter cannot agree to it. Should the read the third time and passed. Minister under very extraordinary House resumed. circumstances not agree to this, then I feel he owes an explanation to this Mr Speaker: The sitting is suspended House as to why he cannot agree to a till 2.30 p.m. proposition which comes from himself. Sitting suspended at 1 p.m. Enche' Cheah Theam Swee: Mr Chairman, Sir, with regard to the point Sitting resumed at 2.30 p.m. raised by the Honourable Member for THE SUPPLY (1964) RILL Seberang Selatan, saying that it is not possible to implement the provisions Second Reading of Clause 4 unless local authorities are The Minister of Finance (Enche' Tan in a financial position to do so, I do Siew Sin): Mr Speaker, Sir, I beg to not think anybody can disagree with move that a Bill intituled "An Act to him in so far as the financial position apply a sum out of the Consolidated to enable local authorities to pay their Fund to the service of the year 1964 employees is concerned. But, again, I and to appropriate such sum for certain would like to point out that we can purposes" be read a second time. only ensure this uniformity wherever Although I have had the honour of possible, and as far as possible. If presenting four Budgets of this Govern­ councils that are run by the Socialist ment already, this Budget has the Front are in no financial position to special distinction of being the first bring themselves into uniformity, Malaysian Budget. The establishment perhaps, they can be declared, or they of Malaysia is a momentous political need not be declared, to come under achievement and its impact will be felt the provisions of this Bill. However in all spheres of our national life. That it is the intention of the Government it will have far-reaching implications to find ways and means, and to in the financial and economic fields is examine the possibility of bringing clear. One result has been the decision local authorities into a position where­ to establish a Malaysian common by they can adopt this uniformity. market about which I shall have more With regard to the suggestion from to say later. Its implications on the the Honourable Member for Tanjong, form and content of the Central I would like to say that in our view Government Budget can be seen from the Government's assurance in this the Estimates before you today. The House would be sufficient assurance; modifications to the relatively uniform and if the Government assures that financial arrangements between the there will be maximum consultation, Central Government and the former there will be maximum consultation. I Malayan States, made in order to would like to remind the House that accommodate the circumstances and this is the Alliance Government. Now, requirements of the new States, are he seems to think that if we refuse to reflected in the Estimates, and I will accept the suggestion to include that elaborate on this point at a later stage. assurance in the Bill, it would be due The absolute size of the Federal to extraordinary circumstances. Sir, I Budget has, of course, been increased would like to say that it is under significantly. It is perhaps sufficient to ordinary circumstances that we see no reiterate here the importance of the reason to have this provision for Federal Budget as the Government's consultation with local authorities and major instrument for forging coherent unions in the Bill. Our assurance, I financial and economic policies. It 2439 16 DECEMBER 1963 2440 remains, of course, a major responsi­ is confined to particular activities and bility of the Central Government to areas of Malaysia. For the present, ensure that national problems will be I need only affirm the Government's met and resolved in accordance with determination to meet the problems the overall interests of the nation as created and reduce to the utmost its a whole. adverse consequences. On the occasion of this first Malay­ In these opening remarks, I wish sian Budget, let me repeat that the formally to place on record the financial and economic problems facing Government's appreciation of the our newly formed nation are basically financial assistance extended by the those of a country attempting to British Government on the formation accelerate its economic development to of Malaysia. The British Government meet the aspirations of its people for agreed to provide £15 million in capital better living conditions in the face of a aid for defence (including £0.5 million rapidly rising population. Our aim must representing defence buildings and be to promote rapid and enduring installations to be transferred to the growth with stability. In this task our Government of Malaysia), and to bear problems are made more difficult by the cost of raising, maintaining and the decline in the price of rubber, training two new battalions in the which is by far our most important Borneo States up to the end of 1965 export commodity, and hence the by which time they should be ready dominating factor in our calculations for active duty. There is also provision on this subject. The establishment of for a review of the situation before the Malaysia provides opportunities as well end of 1965. Assistance is also extended as challenges. Malaysia means the under new secondment terms for creation of a larger economy which is British Service personnel employed in more diversified economically, and the Malaysian Forces. which has greater resources and In the field of economic develop­ potential for growth. For a time, the ment the British Government had administrative problems of transition, agreed to grant £2 million a year for of clarifying in detail Federal and State five years for the development of the roles and responsibilities, of harmo­ two Borneo States, and had extended nising policies and procedures, and of the period during which the Singapore ensuring co-ordination, assume great Government might draw a loan of proportions. With foresight, goodwill £5 million and the balance of grants and co-operation from all, we must totalling £0.78 million all of which had now turn to work to translate the already been offered. It may also be economic promise that is implicit in noted that the British Government had the establishment of Malaysia into agreed to pay the total cost of com­ concrete terms of greater development pensation for expatriate officers in for the whole nation. Sarawak and Sabah, whereas in the It is regrettable that immediately, case of other territories gaining though we must still hope, temporarily, independence, it had, in the past, agreed our new nation is faced with the pro­ to meet up to only half of this cost. blems arising from Indonesia's policy While Malaysia's needs will not have of "confrontation". One aspect of this been fully met by the assistance which problem is the need for this nation to I have enumerated, and it will be increase sharply its defence expendi­ necessary for us to turn to other ture. The other aspect of this problem sources, our appreciation lies in the is the general effect of the trade knowledge that the substantial assis­ embargo imposed by the Government tance extended by the British Govern­ of Indonesia. There can be little doubt ment, and which will be available in that the effects of economic "confron­ these first few crucial years of tation" on Indonesia itself, and Malaysia, will help the Government particularly on Sumatra, are extremely not only to finance the expanded serious, and relatively, far more dis­ defence programme that has become ruptive than its effects on Malaysia. necessary, but also to finance the I will refer later to its impact, which accelerated development programmes 2441 16 DECEMBER 1963 2442 for the Borneo States, and thus ease of renewed advance though somewhat the financial strain that faces this clouded by problems of international nation in the next few years when the liquidity and some pressure on prices. price of rubber is expected to decline In the U.S., the U.K. and other further. countries, rising industrial activity and With these introductory remarks, automobile production have been the allow me now to follow my previous main features of renewed growth. practice, and present, to begin with, a As can be expected under these brief survey of economic conditions in circumstances, world consumption of the major industrial countries, since rubber has risen during 1963. In the conditions in these countries have a first six months, world rubber consump­ significant bearing on our economy. tion was 4.5 per cent greater than In the United States, the economy consumption in the first half of 1962. performed better in 1963 than had However, as a result of the continued been expected in mid-1962. The reces­ encroachment of synthetic rubber in the sion forecast for late-1962 did not distribution of demand, consumption materialise. On the contrary, real gross of natural remained static, and the national product rose 3 3/4 per cent entire increase in total rubber con­ during the first three quarters of the sumption was supplied by synthetics. year compared with the corresponding At the same time, prices of both period of 1962. While many indicators natural and synthetic have been point to a continuing rise in the level declining. of U.S. economic activity, the major This year has seen a continuation economic problems of the previous of the decline that began in 1960 two years remain troublesome—un­ when the price averaged $1.08 per lb. employment, the overall rate of From an average of 80 cents in January, economic growth and the balance of the price steadily declined, reaching a payments deficit. It is now hoped that low of 62 cents in September. The price the legislation on tax reduction and the has recovered since then, thanks partly various balance of payments measures to the Indonesian policy of "confron­ introduced in 1963 by the Administra­ tation"! For the first nine months of tion will succeed both in correcting the this year, the average price was 74 cents, U.S. imbalance in its international somewhat better than the estimate of accounts and accelerating economic 70 cents on which the Budget was based. growth sufficiently to reduce the level The average for the whole year will of unemployment. no doubt be lower and closer to the Economic activity in Britain has also 70 cents mark. Of particular significance been rising this year compared with this year were new cuts in synthetic 1962, but as in the U.S., the perfor­ prices and the elimination of the pre­ mance thus far still gives no firm mium of natural over synthetic. While assurance that the problem of an this continued drop in price reduces unsatisfactory rate of growth has been our export earnings and affects Govern­ solved. The most recent quarterly data ment revenue, it need not be an entirely on industrial activity, employment, unmixed evil if we take a long-term foreign trade and other aspects of this view. subject, suggest that the economy may While total world demand for now be travelling on the road to non- natural and synthetic rubber has risen inflationary expansion. On the Euro­ and will continue to rise over the long pean Continent and in Japan the term, world productive capacity has level of economic activity remained risen even faster and is now far in high, indeed, so high in some members excess of demand. The experts believe of the EEC as to point to disturbing that this supply/demand imbalance signs of inflation and the beginnings may be corrected by the early 1970's. of restrictive policies to prevent serious In the meantime we must expect a disequilibrium. In short, economic continuation of the downward pressure activity in the major industrial nations on prices. Under conditions of excess has generally remained at a high level; supply, prices will continue to fall some countries have seen the beginnings until enough productive capacity has 2443 16 DECEMBER 1963 2444 been made unprofitable to eliminate are using a figure of 60 cents per lb the excess substantially. This pressure for the 1964 Estimates. affects both natural and synthetic pro­ The preliminary figure for rubber ducers and no one can foresee with production in the States of Malaya any certainty at what level the market during the first nine months of 1963 will be in equilibrium because of the was 571,000 tons as compared with influence of a number of factors, some 547,000 tons during the corresponding of them imponderable—such as the period of 1962, an increase of 24,000 rate of increase in Eastern European tons or 4.4 per cent. The estimated net synthetic production, further advances exports for 1963 used for budgeting in natural and synthetic technology, purposes last year was 760,000 tons new investment in synthetic capacity and it is likely that this figure will be in the free world or the effects of achieved if not exceeded. Rubber Government policies of some major production in 1964 is estimated at producers on their ability to deliver around 800,000 tons, compared with an supplies to the world market. estimate of 770,000 tons for this year In a free market, the price decline and an actual output of 750,000 tons is the means whereby the relatively for 1962. inefficient producers of both natural To some extent the effects of the fall and synthetic will be forced to with­ in rubber prices have been mitigated by draw from the market in order to bring the improved market for tin. The supply and demand into equilibrium. average Singapore price for the first In this painful process it is the most nine months of 1963 was slightly more efficient, low-cost producers who will than $445 per picul with the average end up operating at full capacity and price for the 5 months from May to with the biggest share of the market. September exceeding $455 per picul. There can be little doubt that com­ The indications are that the price for pared with the synthetic industry and the last quarter of this year will average other natural producers, Malaysia is $475 per picul. On this assumption the the most efficient, low-cost producer average price for 1963 could well be of rubber in the world. Thus we must slightly more than $450 per picul, continue to pursue our policy of against a figure of $400 on which the replanting and increasing productivity budget was based. vigorously, and at the same time accelerate and expand the pace and The U.S. Stockpile Tin Disposal scope respectively of our research Programme continues to be a dominant activities. It would be well for us to factor in the international tin market. urge countries contemplating further Though changes and modifications have investment in synthetic capacity to been made and presumably will be reconsider the wisdom of their plans made to the programme in future, much in the light of the increasing com­ of the uncertainty in the market which petitiveness of Malaysian natural the programme previously generated rubber. The Government is also sending has been dispelled. Events of the recent rubber trade missions abroad, including past indicate that this stockpile disposal the European Communist countries, programme need not unduly disrupt the which are substantial users of natural market. Statistics also show a falling rubber, as part of our measures to trend in free world production for 1963 counter the sales campaign of the and this trend is likely to continue for synthetic rubber manufacturers. some years ahead. In the circumstances there is therefore every reason to hope It is always difficult to estimate with that the price of tin will continue to any degree of assurance what next hold at around $475 per picul, if not year's average rubber price will be. If higher, in 1964. Malayan production Indonesian supply is reduced for any for the first nine months of 1963 lengthy period, we might expect prices amounted to 45,300 tons and the total to remain at present levels rather than for the whole year is now expected to fall to the lower levels reached in reach 60,000 tons against the 56,000 September. For budgetary purposes, we tons originally estimated. This estimate 2445 16 DECEMBER 1963 2446 was later revised to 59,000 tons, which Second Five-Year Plan target of $2,900 is the figure supplied to the Inter­ million by at least $400 million. I am national Tin Council. This increased happy to be able to say that the rate of production, particularly that in outlook now appears much more the gravel pump section of the industry, favourable. The Statistics Department has been stimulated by the firmness of has recently re-examined the estimates the price of tin. Given the present price, for 1960 and revised its figure for that the current rate of production should year upwards, i.e. from $442 million to be at least maintained in 1964. $567 million. In view of the sharp Despite the deterioration in our terms increases in public investment between of trade, 1963 is turning out to be a 1960 and 1963, and the continuing year of high and increasing domestic growth of population and production, activity. On the basis of the available it is likely that private investment has indicators the signs unmistakably point since been averaging at the rate of at to higher levels of output. Malayan least $580 million per annum. At this electricity consumption by industrial rate, the private sector may well exceed and commercial users (excluding tin the $2,900 million target set for the and other mines) rose by 17 per cent period of the Second Five-Year Plan. from 120.6 million to 141.0 million Good progress has been made this kilowatt hours (KWH) in the first 8 year in the pioneer industry sector. months of 1963 as compared with the Fourteen new pioneer certificates were corresponding period of last year. The issued in the first 9 months of 1963 comparable figures for Singapore compared with sixteen issued during showed an increase of only 4 per cent, 1962. The capital called up by pioneer from 218.3 million to 227.1 million firms during the first 9 months amounted KWH. During the first six months of to $65 million which was 4 times the 1963, Malayan imports of machinery amount called up during the whole of and of transport equipment rose 6 per 1962. However, the additional number cent and 5 per cent respectively, while of jobs created by pioneer firms in the cement production in the first three same period was only 1,000 compared quarters of the year rose by nearly 11 with 2,200 for 1962 reflecting the highly per cent over the corresponding period capital intensive nature of some of the of 1962. I have already referred to the enterprises started this year. Industries increased output of rubber and tin. which began production this year are Contrary to earlier expectations that now turning out a variety of manu­ reduced activity in the Japanese steel factured goods, including chemicals, industry would depress this year's sales plastics, petroleum products, metalware of iron ore, exports were $10 million and glassware. higher in the first nine months of 1963 The amount of currency in circulation compared with the corresponding in Malaysia and Brunei followed the period of 1962. Production in the first normal pattern by reaching a seasonal three quarters of the year was up by peak of $1,296.7 million in January and more than 1.6 million tons compared February of 1963 as a result of the with the first nine months of 1962. various early year festivals, and there­ Present indications are that economic after showing a slight drop till about conditions and the foreign exchange June. At the end of September, 1963, position in Japan in 1964 will be such the amount in circulation was $1,263 that shipments to that country, which million, which was 6 per cent higher takes 99 per cent of our total produc­ than the level reached at the end of tion, will at least equal, if not exceed September, 1962. The upward trend of the 7 million tons expected to be commercial bank deposits and advances shipped this year. recorded in previous years also con­ Honourable Members will recall that tinued in 1963. Total deposits for the last year I expressed some concern over Malaysian territories rose from $2,275 the level of investment in the private million at the end of 1962 to $2,420 sector. It appeared then that private million at the end of July, 1963. In line investment would fall short of the with the trend of deposits and the 2447 16 DECEMBER 1963 2448 needs of a developing economy, total of trade since 1960 refers to the so- bank credit, including the financing of called "commodity" terms of trade trade bills, increased from $1,780 which is a simple ratio of export to million to $1,990 million during the import prices. This kind of measure­ same period. These indicators point to ment does not reflect the fact that in a healthy growth in production, con­ 1963 we are producing a ton of rubber struction, investment and the general with less effort and at lower cost than level of economic activity, aided by a was possible in 1960. As the efficiency considerable boost from the Govern­ and output of our labour, land and ment's public development expenditures. capital are increasing with every passing The rising pace of economic activity month, the same effort produces greater in 1963 is also reflected in the latest volume for export, tending to counter­ estimates of the Gross Domestic balance the fall in export prices per Product of the former Federation of unit. If we had an adequate measure Malaya. It is likely that Gross Domestic of the terms of trade reflecting the Product at constant 1959 prices may quantum of imports we can buy per approximate $6,000 million in 1963. unit of effort required to produce our This would represent an increase of exports, the picture would be much less about $330 million, or 5.8 per cent over unfavourablerAll this is merely another the estimated Gross Domestic Product way of expressing the results of our for 1962 at constant 1959 prices. A 5.8 replanting programme and re-empha­ per cent rate of growth compares sizing the need to carry it forward favourably with the 3.9 per cent increase vigorously. achieved in 1962 and 5.1 per cent in 1961. The price of rising domestic activity in the face of sluggish export growth The importance of the decline in the has been a deterioration of our external price of rubber may be gauged from accounts. Since 1960 the favourable the reflection that had the price of balance on merchandise account rubber remained unchanged at its 1959 (valuing imports c.i.f.) for the former level, Gross Domestic Product would Federation has declined from $773 have been over $300 million higher in million in 1960 to $394 million in 1961 1961 and over $400 million higher in and $173 million in 1962. In the first 1962 than it actually turned out to be. nine months of this year, exports rose The deterioration in the terms of trade less than 4 per cent and imports rose coupled with the 3 per cent increase in 5 per cent compared with the corres­ population per annum has caused "real" ponding period of last year. The trade per capita national product between surplus for this period was $156 million, 1955 and 1963 to decline slightly. The down $38 million compared with 1962. continuing deterioration in our terms The adverse movement in the terms of of trade brought about by the fall in trade and the effect of higher imports, the price of rubber is one of the central as a result of development expenditure, facts of life for Malaysia. The brunt has led to a major swing in our balance of this structural decline in the price of of payments also. Thus, in 1960 the natural rubber is being felt now and current account favourable balance will be increasingly felt in the next few amounted to $308 million. This was years. Although the production of sharply reduced to $15 million in 1961. rubber is rising, the major increases in In 1962, a large deficit of $203 million production as a result of replanting will appeared. For 1963 the balance will not take place until the second half of remain in deficit at about the same level this decade. In assessing the prospects as that for last year, that is, slightly for growth of the national income, it is over $200 million. In 1962 the balance necessary to bear in mind that it will of payments deficit on current account take time before some of the fruits of was offset by a net inflow of funds the Development Plan can be fully from abroad, and there was very little realised. change in the foreign exchange reserve It is worth noting that the recorded position. It is likely that the reserves 20 per cent deterioration in our terms will be moderately affected in 1963. 2449 16 DECEMBER 1963 2450

The current account deficit is likely to the country which would have enabled be slightly larger in 1964. Bank Negara to become a central bank in every sense of the word and, in In recent years Singapore has had a particular, to perform effectively one of deficit on its merchandise account. its most important functions of being While Singapore's invisible earnings are a lender of last resort. substantial, these are normally insuffi­ cient to meet its merchandise deficit. It is the policy of the Government As in the case of Malaya, Singapore's that Bank Negara should become the deficit in the recent past has been currency issuing authority of the financed largely by an inflow of long- country as soon as possible. With term private capital. Sarawak and Brunei outside Malaysia, however, it is Sabah have in recent years had a small necessary to negotiate with the Brunei favourable balance on merchandise Government regarding the taking over account. However, it is believed that of the assets and liabilities of the their invisible payments are larger than Currency Board by Bank Negara if the their invisible receipts, resulting in complicated and drawn-out process of small deficits on current account. No liquidation of the Currency Board in statistical data are available for the accordance with the provisions of the construction of a capital account. Currency Agreement is to be avoided. We are of course willing to extend our Rough estimates of the balance of full co-operation and assistance to payments for Malaysia indicate that it Brunei if it wishes to use, in place of had a deficit on current account with the present currency issued by the the rest of the world of approximately Board, the Malaysian currency to be $350 million in 1962. For 1963, it is issued by Bank Negara which would estimated that the deficit will be of the in such circumstances be prepared to order of $400 million. The decline in consider providing any services re­ prices of the primary products of quired by the Brunei Government. I Malaysia, the loss of earnings from the hope that the negotiations will be Indonesian trade and larger imports on successfully concluded with mutually account of the respective development beneficial results. programmes will be the principal causes of the larger deficit. During this year there has been a desirable expansion of banking services It is difficult at this stage to give any and activities. With the addition of the reliable estimate of the balance of States of Singapore, Sarawak and Sabah payments for 1964, not only because of there are now 42 banks with 346 the difficulty of forecasting with any banking offices operating in the country degree of accuracy the prices of our compared with 41 banks and 308 main export products but also because banking offices at the end of 1962. of the likely effects of political factors Most of the new banking offices were on our earnings from trade and our opened in various parts of Malaya and expenditure on defence. It can however Singapore. be expected that the current account deficit will be larger than that for 1963. Constitutionally, banking is a subject on the Federal List except in Singapore In my Budget speech in December, where it is a concurrent subject. How­ 1961, I said that Malaysia would pro­ ever, it is the intention of the Central vide the solution to one of our most Government to extend both the Central important problems, namely our cur­ Bank of Malaysia Ordinance and the rency arrangements. It was envisaged Banking Ordinance to cover all the that Malaysia would cover all the five territories of Malaysia at an early date. territories which are parties to the This will bring the regulation and present Currency Agreement. The deci­ supervision of banking business through­ sion of Brunei not to join Malaysia has out the country under a single authority somewhat complicated an otherwise as it cannot be denied that this con­ simple replacement of the Currency summation is desirable. The extension Board by Bank Negara, Malaysia, as of the jurisdiction of Bank Negara the sole currency issuing authority for throughout the country will enable it 2451 16 DECEMBER 1963 2452 to play its proper role of promoting we have to guard against unscrupulous economic growth through the main­ persons who may capitalise on the tenance of monetary stability and a enthusiasm of these small and new healthy financial climate. investors by issuing shares for doubtful The Bank has already established a enterprises. In view of this and in order branch in Singapore for the purpose of to bring about a more orderly flotation handling a number of accounts arising of shares and debentures in the market, out of the provisions of the Malaysia the Government is considering the Agreement. The branch will provide enactment of suitable legislation for complete central banking facilities the protection of depositors with, and early in 1964 when alterations to its investors in, companies. Current listing premises are completed. Preliminary requirements of the Stock Exchanges enquiries have also been made with a are also being examined. In this con­ view to establishing branches in Sara­ nection I would like to emphasize the wak and Sabah at the appropriate time. need for careful scrutiny by the Stock Exchanges themselves before stocks are Stock Exchanges function in both listed, and also the need for critical Singapore and Kuala Lumpur. The appraisal by the home Press. While the Stock Exchange in Kuala Lumpur had oversubscription of new issues that its beginnings in 1959 when a number have so far come on the market indi­ of share brokers with the encourage­ cates to some degree the availability ment of the Central Bank met for the of considerable amounts of domestic first time in the Bank's Clearing House capital for investment, it also empha­ to conduct their afternoon calls to sises the speculative element among mark prices. By 1962, the Stock Ex­ many such investors today. change had established a proper trading room with a public gallery and a direct With more commercial banks be­ telephone link with the Singapore coming accustomed to holding Trea­ Stock Exchange, a facility which en­ sury Bills in their portfolios and to ables the best "bid" and "offered" rediscounting them with the Central prices to be posted almost simulta­ Bank when the need arises, the neously on the trading boards in both beginnings of a money market are centres. taking shape. The issue of 2-year and During 1963, the Stock Exchange 5-year maturities of Government loans continued to make steady progress. to meet the needs of banks and institu­ With the admission of new members tional investors should help towards and hence keener competition among this development by increasing the the brokers, a better service to the availability and range of Government public can be expected. The establish­ paper on the market. A significant ment of branch registers in this country development is that a discount house by companies incorporated in the proposes to operate in both Kuala United Kingdom, but whose main Lumpur and Singapore. This should operations are in Malaysia, has faci­ further stimulate the development of litated transfers of shares of these a Malaysian money market and trading companies. in Government securities. Encouraged by the success of the It may be appropriate at this point new share and debenture issues in to say a few words on the economic 1962, domestic companies are turning effects of the cessation of trade with increasingly to this method of raising Indonesia to which I have referred in additional capital for themselves. They my opening remarks. I need not labour are beginning to realise that for the the point that Indonesia is the major development of large industrial and loser in this policy. As the hiatus in other enterprises the public company their main export channels lead to a form of organisation with wide partici­ piling up of their unprocessed and pation by the investing public is more ungraded export commodities, the appropriate than that limited to imme­ internal prices of these commodities diate members of the family and close are falling as they become unsaleable friends. While this is most encouraging, within the country itself. Their imports, 2453 16 DECEMBER 1963 2454 in consequence, are disrupted and adverse effect is the reduction of over­ prices of essentials, including rice, soar land imports of Indonesian rubber, to new record levels. Dwindling export though this trade had already been receipts lead to further payments diffi­ affected in any case by the earlier culties and additional import and border troubles. Although Sarawak exchange restrictions. imported petroleum products from the Shell refineries in Indonesian Borneo, At the same time, it must be con­ there should be no difficulty in ceded that confrontation has had its obtaining supplies from other sources. adverse effects on our economy, too. The effect on Sabah can be expected It has been estimated that a complete to be marginal. Fortunately for us, stoppage of trade for a full year may Malaysia does not depend on Indonesia lead to a direct reduction in Malaysian for its imported consumer goods, income of the order of $250 million. apart from petrol, and this can easily This is about equivalent to the reduc­ be obtained elsewhere. As a result, the tion in export receipts to Malaysia if effect on Malaysian cost of living has the price of rubber were to drop by been small. It has been limited to about 13 cents a pound. The Malaysian some increases in certain areas in the economy has of course absorbed much prices of vegetables and fish. greater shocks in the past when the prices of its main export commodities How long this severance of trade fell sharply. While it is clear that the relations will continue will clearly maximum impact of the severance of depend on political developments. The trade with Indonesia in the aggregate impact of the rupture will also depend cannot directly reduce total Malaysian on whether the Indonesian authorities national income by more than a small have the means as well as the will to percentage, it is also clear that the prevent all smuggling and indirect trade impact is concentrated in a few places whereby goods are consigned initially and in a few activities where the effects to a third country. In assessing the have been felt rather sharply. Secondly, impact, it should be noted that to its impact on employment is parti­ some extent, traders and factories do cularly pronounced. It has been esti­ not rely solely on trade or supplies mated that Indonesian trade confronta­ from Indonesia, and they should, in tion may have by now directly reduced varying degrees, be able to find other employment in Malaysia by about sources of supply including Malaysian 10,000. ones, and adjust their activities accord­ ingly. The Singapore Government has As might be expected, the entrepot already worked out a scheme to give trade of Singapore has been the worst temporary relief to some of the workers hit. On a smaller scale, the entrepot affected. The Central Government is trade of Penang is similarly affected. considering similar relief measures for Singapore used to import from Indone­ workers affected in Penang. With re­ sia mainly rubber, petroleum, copra, gard to the fishing industry, the Govern­ coffee and spices, which were then ment is already taking all measures remilled, processed or graded largely possible to provide adequate protection for re-export to other countries. At the for our fishermen against Indonesian same time, Singapore re-exported to pirates. Indonesia textiles, rice and a large variety of manufactured goods. Penang's While the Government is conscious trade with Indonesia was of a similar that it will be necessary, in some cases, nature though she also imported tin to alleviate the plight of those who have ore for smelting. The impact on the suffered and are suffering from Indone­ other Malayan States is limited to sia's policy of economic confrontation, those factories remitting Indonesian it is equally conscious that it should rubber in Province Wellesley and South not lose sight of the long-term implica­ Johore. We should also note the effect tions. This episode has proved, if further on the fishing industry of the increased proof is needed, that the entrepot trade amount of piracy in the Straits of of Singapore and Penang is highly Malacca. In Sarawak, the major vulnerable to external pressures which 2455 16 DECEMBER 1963 2456 are beyond our control, and if this authority expenditures in the whole of break were to continue for any length Malaysia. The deficit on the balance of of time, there could well be major and payments will be large and will have permanent shifts in our pattern of trade to be met partly by drawing on the with Indonesia. Prudence dictates that foreign exchange reserves of the country we should take these possibilities into and partly by borrowing. To some account in our long-term planning, and extent, this was envisaged in the in this context, the proposal to establish Malayan Development Plan. a Malaysian common market is highly Let us now turn to the accounts of relevant. the Federal Government. Last year I To revert to our review of the domes­ forecast that it seemed likely that tic economic scene, we may conclude revenue for 1962 would be of the order that 1963 would have been a satisfac­ of $1,070 million. I am happy to state tory year but for the decline in the that the actual figure reached was price of rubber. Physical production of $1,097 million, which was $16 million rubber, rice, tin and iron-ore, and above the previous all time record other indicators such as electricity achieved in 1961 (Applause). Ordinary consumption and construction activity budget expenditure in 1962 amounted show increases. The decline in the to $1,072 million so that there was a price of rubber, however, depresses surplus of $25 million on the Ordinary income received. The level of domestic Budget (Applause), or a surplus on cur­ activity has been well sustained by the rent account of $145 million if we rising current account and development exclude the $120 million contribution expenditure in the public sector, and by to the Development Fund which was some increase in private industrial and included in ordinary budget expendi­ other developmental activity of a non- ture. Development expenditure, which industrial nature like replanting and in 1961 was $264 million, rose in 1962 new planting of perennial crops. to $415 million, and allowing for the transfer of $120 million from revenue The prospect for 1964 is likely to be to the Development Fund the total of similar to that for 1963 except for a ordinary and capital expenditure in more severe strain on the balance of 1962 amounted to $1,367 million. payments. Output of the main primary commodities such as rubber, tin and There was thus an overall deficit palm oil, and a few other commodities for 1962 of $270 million which is like pineapples and timber can be reduced to $268 million when allowance expected to show increases. The 1964 is made for a $2 million receipt cre­ rice harvest on the other hand may be dited direct to the Development Fund. below this year's output due to the This compares with an overall deficit poor rainfall pattern in some parts of of $69 million in 1961, and an overall the country. Private sector investment, surplus of $98 million for 1960. During including industrial development activi­ 1962 gross borrowing totalled $186 ties, should also increase. Depending million. Since net receipts from various on political developments, the effects trust accounts amounted to $30 million, of the Indonesian trade confrontation the Central Government's reserves were will make themselves increasingly felt. reduced by $52 million during that year. The price of rubber is expected to show It is perhaps not out of place here to a further decline. The level of domestic compare the position between 1960 and activity will continue to be supported 1962. In 1962, budget revenue was $28 by increased public sector expenditure, million or 3% higher than in 1960. arising from increased defence and Current account expenditure, i.e., ordi­ internal security expenditure, and nary budget expenditure excluding the decision to forge ahead with the contributions to statutory funds, had Malayan development programme as risen by $122 million or 15% between well as to accelerate development these years. Even more striking is the expenditure in the Borneo States, in increase in development expenditure addition to what may be regarded as which had increased by 194% to the normal growth of combined public $415 million in 1962. As the rise in 2457 16 DECEMBER 1963 2458 revenue had not kept pace with the It is expected that development rise in expenditure, Federal reserves expenditure in 1963 will reach a total which had increased during the three- in the region of $450 million as year period ended 31st December, compared with $415 million in 1962 1961, began to decline in 1962. and $264 million in 1961. The fore­ For 1963, it seems likely that re­ cast made in Command Paper No. 44 venue will reach a new record of $1,136 of 1962 was that actual expenditure million (Applause). Except for an on development in 1963 would be amount estimated at $6 million which approximately the same as in 1962, is receivable from Singapore in respect that is to say, between $400-$420 mil­ of the period from Malaysia Day to lion. The forecast would probably have the end of the year, this total is directly proved correct had it not been for the comparable with the 1962 figure, since extra expenditure required on Defence it includes no other additional revenue and Internal Security in connection with as a result of Malaysia. This figure is Malaysia which is likely to exceed $30 $114 million above the original printed million. Estimates for the year, and $39 million Turning now to the future, we have above the actual receipts for 1962. before us Expenditure Estimates pro­ There is a drop of $11 million in the viding not only for Malaya but for the yield from export duty on rubber as new States of Singapore, Sarawak and against 1962, but an increase of $6 Sabah and the total figures are there­ million in that from tin due to fluctua­ fore much higher than any I have tions in the prices of these commodities. previously laid before the House. The The yield from rubber will exceed the Estimates for 1964 are tabled in two original estimate by $10 million while volumes, one covering expenditure for that from tin will probably be $15 mil­ Malaya, and the other, expenditure for lion above the original estimate. The the 3 new States of Malaysia. The estimate is that receipts from income total of the Estimates for* the whole of tax will exceed $230 million as against Malaysia amounts to about $1,470 an original estimate of $189 million million. The total for Volume I alone and as against actual receipts of $237 is $1,254 million of which $71 million million for 1962. It is interesting to is attributable to centrally incurred note that the 1962 yield for this tax expenditure on account of Malaysia. exceeded that for 1961 by $5 million, The balance of $1,183 million repre­ and represents the highest annual sents as nearly as it is possible to collection to date. calculate the provision comparable to Receipts from the Currency Surplus that included in the Estimates for the Fund distribution in 1963 at $40 million old Federation of Malaya in previous are nearly $9 million above those for years. This figure of $1,183 million is 1962 and as against an estimate of $95 million more than the original $32 million. Estimates for 1963. The 1964 revenue from Malaya at existing rates of taxa­ Ordinary expenditure for 1963 is tion is estimated at $1,118 million so expected to reach $1,273 million as that the current account deficit attribu­ against the figure of $1,088 million table to Malaya is $64.6 million. If we originally authorised in the Budget, and bear in mind that the expenditure $1,393 million if the four Supplemen­ figure includes a contribution of $50 tary Supply Bills are included. On million to the Development Fund, $15 present indications, there should be a million to the Contingencies Fund, and deficit of $137 million on the Ordinary $0.3 million to other statutory funds, Budget for 1963. If allowance is made none of which are properly current for transfers of $200 million to the account charges, there will actually be Development Fund and $23 million to a surplus of just under $1 million on other statutory funds, there would be the Malayan account. a surplus of $86 million on current account. This is $59 million less than As regards the new States, I should the comparable figure of $145 million first mention that as a result of the for 1962. Malaysia Agreement, the constitutional 2459 16 DECEMBER 1963 2460 arrangements for the sharing of re­ them by the Federal Government. The venue and expenditure between the full particulars of the grants payable Central Government and the States to Sabah and Sarawak can be found are different in each case. In Singapore under Head C. 11 in Volume II of the a number of Departments which in the Expenditure Estimates. rest of Malaysia are Federal remain Leaving aside these special grants the responsibility of the State Govern­ and other services such as pensions ment. Under Annex J to the Malaysia and Judges' salaries which are charged Agreement, all revenue derived from on the Consolidated Fund, the expen­ Singapore which, under the terms of diture on Federal services in Singapore, the Constitution, is Federal revenue is Sarawak and Sabah is in each case less paid into a Joint Fund held in Bank than the revenue to be received from Negara from which 60 per cent goes the State concerned. The 40 per cent to Singapore and 40 per cent to the share of Federal revenues receivable Federal Government. This arrangement from Singapore amounts to $117 mil­ lasts until the end of 1964 after which lion, while expenditure on Federal it will be subject to review. supply services in Singapore amounts In the case of Sarawak, the arrange­ to $78 million, leaving a surplus of ment of Federal and State responsibili­ $39 million. Revenue from Sarawak ties is, with a few minor exceptions, is estimated to amount to $56 million, similar to that applicable to the States while expenditure on supply services in of Malaya. However, in recognition of Sarawak amounts to $53 million, the need of the Sarawak Departments leaving a surplus) of $3 million. Re­ to catch up with those of the rest of venue from Sabah is in the region of the States of Malaysia and of the $52 million while expenditure on comparatively small amount of revenue supply services in Sabah amounts to which can be expected from that State $42 million, leaving a surplus of until its development has reached a nearly $10 million. These surpluses of more advanced stage, there are special revenue over supply expenditure add arrangements for grants to be paid by up to $52 million. Against this, how­ the Federal Government in aid of the ever, must be set the figure of $43 State Budget. million covering the charged expendi­ ture on Judges' salaries, statutory In the case of Sabah, the main grants and pensions to which I have difference in the financial arrange­ already referred. There is, therefore, ments as compared with the States of about $9 million derived from these Malaya is that for a period of five States which are available to help years medical and health services are meet the cost of the extra centrally the responsibility of the State Govern­ incurred expenditure attributable to ment and thus fall to be paid for by Malaysia. the State. In consideration of this, 30 per cent of net Customs revenue de­ The position on current account for rived from Sabah is to be paid over to Malaysia shows an expenditure of the State. In order to provide a growth $1,470 million against revenue of $1,343 element in State revenue, Sabah is also million giving a deficit of $127 million. to receive each year a grant equal to As I have already stated, however, the 40 per cent of any increase in Federal expenditure total includes a contribu­ revenue derived from Sabah and not tion of $50 million to the Development assigned to the State over the Federal Fund and $15 million to the Contin­ revenue which would have accrued in gencies Fund. If this amount of $65 1963 if the Malaysia Act had been in million is substracted, the current force in that year. The sum payable account deficit emerges at $61 million would be calculated on the basis of on the basis of the budgeted figures. actual revenue received in each year. Following the trend of the expenditure Both Sarawak and Sabah have accounts over the last few years, assumed responsibility for their Road other than 1963, which owing to the Transport Departments, and the cost requirements of Malaysia has been of these Departments is reimbursed to abnormal, it is likely that actual 2461 16 DECEMBER 1963 2462 expenditure on current account includ­ amount originally provided for 1963. ing the normal amount of Supple­ This represents a rise of 11 1/2%. It will mentary Estimates during the year, will be remembered that in my speech last fall short of the original total estimate year, I stated that the Education Esti­ by about 2%, or $30 million. If this mates had been pruned rigorously to experience is repeated in 1964, the bring them down to the figure of $230 results on the present estimates of million which was then provided and revenue will be an actual current that it might be necessary during the account deficit of no more than $31 course of 1963 to come to the House million, and in the context of the size for a supplement. A supplement of $14 of the figures with which we are work­ million has in fact been included in the ing, this can be regarded as practically Fourth Supplementary Estimates for a balanced Budget. 1963. Taking this into account the in­ crease in the Estimates for 1964 is only The principal increases and reduc­ $12.5 million over the total appropria­ tions in expenditure as regards the tion of $244 million for 1963. This is a Estimates for Malaya are set out in rise of 5.1% as against the increase of paragraphs 8, 9 and 10 of the Treasury 11.7% in the total appropriation for Memorandum tabled as Command 1963 when compared with an actual Paper No. 51 of 1963. Paragraph 10 of expenditure of $218.5 million in 1962. the Command Paper deals with items The continuing increase is mainly due which can be described as additional to expenditure on grants-in-aid to centrally incurred expenditure largely primary schools in order to keep up attributable to Malaysia. The increases with the continually rising enrolment for the Heads referred to are partly due figures. Vast though the sums required to Malaysia and partly to the require­ are, there is no doubt that money spent ments of Malaya. The figure of $70.6 on education is an investment in the million which is given on the front of future prosperity and happiness of our Volume I of the Expenditure Estimates country and somehow or other the represents the sum of those elements money to meet it has to be found. I of expenditure under these Heads which might perhaps reveal at this point that are attributable to Malaysia. the percentage increase in the expendi­ ture on education in Sabah in the first The largest increase is on the Esti­ year of Malaysia is no less than 29.7% mates for the Ministry of Defence, while that for Sarawak is 17.6%. which have risen by $64 million or 69% over the 1963 budget provision. Expenditure on the Royal Malaysia This is of course due to the defence Police in Malaya has increased by requirements of Malaysia and, in the almost $14 million, a 16% rise over context of confrontation, it is obviously last year's budget estimate to a total unavoidable. Armed forces are very of $101.6 million. Expenditure on the expensive to maintain, and unless their Police in Singapore has risen by $8.8 expansion is carefully controlled they million, in Sabah by $3.1 million, and can easily run away with a very large in Sarawak by $4.5 million. The Sara­ share of the national budget. Nothing wak figure represents an increase of would please some of our neighbours 92.4% over the expenditure on the Con­ more than to see the wealth of Malay­ stabulary in that State for 1963. This is sia drained away in defence expenditure a measure of the vigorous steps taken in the manner that has become familiar by the Malaysian Government to deal to themselves. We have no intention with the security situation caused by of allowing this; nevertheless the Go­ confrontation and Communist sub­ vernment is determined to see that version. Malaysia is securely defended and will not hesitate to provide the money neces­ One feature of the Estimates which sary for this purpose. is always a source of concern is the rate of increase in the provision for The provision for the Ministry of Personal Emoluments. In the Estimates Education for 1964 is $256.5 million, for Malaya, the 1964 provision is in which is $26.5 million higher than the the region of $345 million compared 2463 16 DECEMBER 1963 2464 with the figure of $299 million esti­ of 2, 5 or 16 to 18 years maturities. mated for 1963. The provision is thus In 1962 the total amount of domestic $46 million more than that for the loans issued was $195 million and in current year, an increase of something 1963 the amount issued to date total over 15%. The actual expenditure on $175,500,000. The Government has Personal Emoluments in 1962 was $268 decided to discontinue the issue of million while that in 1961 was $256 Treasury deposit receipts as Treasury million and that in 1960 was $223 mil­ bills and short term loans provided pre­ lion. Assuming that there will be some ferable forms of Government securities. shortfall in actual expenditure for 1964 As a result the amount of Treasury owing to unfilled vacancies, the in­ deposit receipts in issue has declined crease in expenditure will nevertheless from $102.7 million at the beginning of be of the order of 50% over the 1960 1963 to $56.2 million at the end of figure. A large part of this increase is September, whereas the volume of Trea­ due to the build-up of the strength of sury bills in issue has increased from the Armed Forces and of the Police $109.3 million to $148.7 million during in the context of Malaysia. Further this period. During the same period, the increases are a direct result of the amount of 2 years loans outstanding expenditure provided for in the Five- increased from $15.0 million to $49.5 Year Development Plan, which natu­ million. rally calls for more staff to construct the new projects and to maintain them As I have stated earlier in my speech, when they are completed. the adverse trend in our balance of payments makes it most desirable for In addition a considerable part of the Malaysia to increase the volume of its rise is due to increases in salaries result­ foreign borrowing. Furthermore, such ing from Whitley Council negotiations. borrowing will increase the resources On the basis of the offers so far made available for financing development this year, these negotiations will be res­ expenditure which can otherwise only ponsible for adding nearly $21.1 million be financed by curtailing current con­ to the annual salary bill, including that sumption. I am glad to say that despite paid by the Malayan Railway Adminis­ the uncertainties arising from political tration. Government officers and mem­ change and the hostility of our neigh­ bers of the public may sometimes bour, Indonesia, our reputation for wonder why the Government appears sound finance has enabled us to obtain to be so reluctant to increase salaries a satisfactory amount of foreign loans when pressed to do so by staff organi­ (Applause). sations. A sum of $345 million out of a total recurrent expenditure of $1,254 Since Merdeka the Federation of million for Malaya alone is a very large Malaya had not raised any foreign loan proportion to spend on Personal Emo­ through a public issue in the world's luments, and it is clear that the rate of financial markets until July this year increase of this expenditure is much when it floated a £5 million pilot loan greater than the rate at which the in the London market. This loan opera­ revenue rises. While the Government tion, which was undertaken by Bank naturally wishes all its employees to Negara as the Agent for the Govern­ receive a fair return for the valuable ment, was a complete success, with the services which they perform, there is loan being oversubscribed within one nevertheless an obligation to make sure minute of the opening of the list. This that the salary bill does not increase at most gratifying result of our first such a rate as to impose a grievous overseas loan since independence burden on the general public who must clearly demonstrates the faith and provide the revenue from which the confidence foreign investors have in salaries are paid. our country (Applause). Our successful floatation of the pilot loan in During 1963 there has been no major London helps to make us known change in Government policy regarding to investors and opens the way for the issue of loans. Loans have been future loans in the London market. issued in forms which offer the choice It will also make it easier for us to 2465 16 DECEMBER 1963 2466 approach other overseas capital deepwater wharves at Butterworth. The markets. relevant loan and project agreements During my recent visit to the United have already been signed. It should be States to attend the IMF/IBRD Annual noted that the loan is untied and the Meetings, the Governor of Bank Negara principal contracts will be awarded on and I explored the possibilities of our the basis of international tenders, the Government raising loans in the New only restriction being that goods and York market. I am pleased to say that services to be procured from loan funds our talks with investment bankers there may not be purchased from Communist have been very encouraging and I have countries. every reason to hope that it will be The loan is for a period of 20 years possible for us to raise M$30 to $45 and will bear interest at 3 per cent per million in the New York market at a annum which, as Honourable Members suitable time. For this purpose, and as will note, is well below normal market a first step, we have appointed Messrs rates for this type of loan. I am sure Kuhn, Loeb & Company, a well-known the House will wish me on its behalf firm of investment bankers in New and on behalf of the Government to York, as our sole agent in the United place on record our deep appreciation States. of this generous gesture of the Govern­ In addition, the Central Electricity ment of the Federal Republic of Board has obtained a loan from the Germany. (Applause). World Bank of US$51.9 million As Honourable Members will appre­ (M$159 million) to finance the second ciate, the Estimates are based on the stage of the Cameron Highlands position ruling at the time of prepara­ hydro-electric project, the construction tion and, therefore, the actual charges of a steam station at Prai and related on account of public debt are always transmission lines. This loan will greater than the amount estimated, as finance the foreign exchange cost of new loans are raised throughout the this essential development of our power year. The following comparison is supplies. The World Bank has also based on the original estimates for granted a loan of US$8 million (M$24 1963 and the estimates for 1964. million) to Malayan Industrial Develop­ Charges on Account of Public Debt ment Finance Ltd, and the International have increased from $121 million to Finance Corporation has agreed to $153.3 million, that is by $32.3 million. invest US$833,000 (M$2.5 million) in This sharp increase is mainly due to the ordinary shares of the Company of the provision of $15.6 million for the which 60 per cent has been paid up. repayment of the $20 million 4 1/2 per This loan and investment has enabled cent 1964 loan, but I am hopeful that the reorganisation of the Company it will prove possible to refinance this which I described in my Budget speech loan. The balance of the increase is last year to be carried out and I am due to the additional interest charges confident that this Company now has and sinking fund appropriations on adequate resources to enable it to make new loans which have been raised and an effective contribution towards the which total $20.4 million, this increase financing of industrial development in being partially offset by a decline of Malaysia. These two loans are $4 million in the interest payable on guaranteed by the Federal Government Treasury deposit receipts, the reason and constitute a contingent liability on for which I have already explained. the Consolidated Fund, but as the liability is contingent only it is not As I mentioned last year, the Malay­ reflected in the Estimates of Charges sian Government re-lends substantial on Account of Public Debt. amounts to the States and statutory authorities. At the end of September, The Kreditanstalt Fur Wiederaufbau 1963, loans outstanding amounted to of the Federal Republic of Germany $405.7 million, and it is estimated that has also agreed to make a loan of in 1964 repayments of principal will Deutsche Marks 21 million to finance amount to $3.6 million and interest the foreign exchange cost of the new payments to $14.2 million, so that 2467 16 DECEMBER 1963 2468 excluding the sum of $15.6 million term from the Employees Provident shown for the repayment of the $20 Fund. The E.P.F. has also lent funds million 4 1/2 per cent 1964 loan the nett to Borneo Housing Development Ltd expenditure on account of the public so as to assist towards an expanded debt is $119.9 million, that is 8.9 per loan programme in the Borneo States. cent of the estimated revenue. Furthermore, in 1963 the Government The public debt charges are not at gave substantial additional encourage­ an imprudently high level and it should ment to intending home purchasers by be noted that the charges payable in exempting from income tax the nett foreign exchange are modest. It is annual value of a house occupied by relevant to note in this context that a the owner. steady rise in the public debt is a An effective programme of house natural result of the progress made construction has three main require­ under the Second Five-Year Plan. In ments—finance, suitable sites and an fact, the projection made by the efficient construction industry. In planners themselves provided for the Malaysia both land and housing are a cost of the servicing of the public debt State responsibility. Co-operation be­ to rise to a figure of $175 million by tween the Central and State Govern­ 1965. Nevertheless, Honourable Mem­ ments is therefore essential if progress bers will be aware that the level is not is to be made. only rising absolutely but more Housing can be divided into two significantly in relation to revenue. I main categories, that is medium cost feel obliged, therefore, to repeat my housing and low cost housing. As warning last year that continued regards medium cost housing it is the increases in the level of debt can only Government's policy to leave the be justified if the loans are spent implementation of schemes and the primarily on economic projects which construction of houses to private enter­ will increase the wealth of Malaysia. prise, but to assist by expanding the As a result of the establishment of volume of finance available for this Malaysia the Malaysian Government purpose. At my request Bank Negara has become responsible for that part is examining ways and means of of the State debt of Sabah which has increasing the volume of commercial been expended on the creation of bank lending for home ownership, and assets which become Federal, for I hope it will be possible to announce instance on the assets of the Postal the details of the scheme in the near and Telecommunications Departments. future. I have also agreed to an It is estimated that the amount involved accelerated lending programme by the will be $4,888,979. The estimated Malaya Borneo Building Society and annual charges amount to $342,229, although I would prefer to see the thus increasing the net charges to Society obtain funds in the open market, $120.2 million, which is still about I am prepared to authorise further 8.9 per cent of estimated revenue. loans by the Employees Provident Fund in order to enable the Society to Ownership of the house in which one maintain its present rate of interest lives affords great personal satisfaction on mortgage loans. and a sense of security, and the policy of this Government is to encourage the In Kuala Lumpur there is an urgent construction of houses for owner need to provide houses for the servants occupation. As Honourable Members of the Federal Capital Commission and are aware the Government has made Government servants. The Commis­ substantial funds available in the sioner has suitable land available and Development Programme for financing I have therefore authorised a loan of the construction of low cost housing $10 million to the Commissioner to and has assisted in the provision of finance the first stage of a home con­ finance for housing loans not only by struction scheme. investing in the equity of the Malaya Low cost housing is only practicable Borneo Building Society but also by if both land and finance are provided enabling the Society to borrow long cheaply. For its part the Central 2469 16 DECEMBER 1963 2470

Government has provided and will ducing a Customs Duties (Amendment) continue to provide loans at very low Order to give effect to these alterations rates of interest for the construction with effect from 1st January, 1964. The of low cost housing, and I urge all alterations are, however, only of a State Governments to assist in an technical nature and do not effect signi­ expansion of the programme by pro­ ficant changes in the rates of duty viding suitable sites at cheap rates, payable. The adoption of a common despite the financial sacrifice involved. trade classification and tariff code Nevertheless, the Central Government's throughout the States of Malaysia is ability to provide cheap money is not an indispensable preliminary step to limitless and I suggest that all State the implementation of our policy of Governments and local authorities industrial promotion by the judicious should give consideration to providing use of protective tariffs. In due course some of the finance required from the uniform Customs legislation applicable rates, thus ensuring that all property throughout Malaysia will be introduced, owners assist in this aspect of urban but this will be a lengthy process and improvement. There is a large need it may well be necessary to introduce for rehousing in Kuala Lumpur and in interim legislation to facilitate the order to assist in overcoming this movement of goods between the problem I have agreed that the Com­ various parts of Malaysia, prior to the missioner may issue a public loan of establishment of a common Malaysian $20 million to finance a programme of import tariff. construction of low cost flats and I hope that there will be a good response Honourable Members will wish to from the public to this issue. know what progress has been made in the plan to establish a Malaysian As Honourable Members will be common market on which such great aware, separate Customs legislation store has been laid. The Government exists in the States of Malaya, Singa­ is still looking for a suitable person pore, Sarawak and Sabah. Our ulti­ to assume the duties of Chairman of mate aim must be a common Malay­ the Tariff Advisory Board. An offer sian import tariff and free movement has been made to a candidate con­ of goods within Malaysia, but this sidered to be suitable and it is hoped objective will take time to achieve. As that the quest will be completed in a first step, it is proposed that Sarawak the near future. With the nomination and Sabah shall adopt the trade classi­ of the Singapore Government of one fication and tariff code now in force in of the three Deputy Chairmen and the the States of Malaya with effect from appointment of a panel of part-time 1st January, 1964. I wish to stress, members, the Board should be com­ however, that although this will involve plete and ready to begin its task. a complete change in the tariff code The House will recall that in 1960 I applicable in these two States, it is not stated that it was our intention to our intention that the duty rates should extend the coverage of the Employees be completely harmonised with those Provident Fund Ordinance so as even­ ruling in the States of Malaya with tually to bring all employed persons effect from 1st January, 1964. As was under the umbrella of this valuable agreed in the Inter-Governmental Com­ social measure and, as a first stage, I mittee Report, the harmonisation of announced last year that we proposed the tariffs now prevailing in the States to extend the scheme to emplovers of Sarawak and Sabah with that appli­ employing three or more persons. This cable in the States of Malaya will be was implemented in April, 1963 and, accomplished in graduated stages. in the coming year we propose to It will also be necessary to make amend the Schedule to the Ordinance some amendments to the trade classi­ further to provide that all employers fication and tariff code now applicable shall be required to pay contributions in the States of Malaya in order to however few employees they may have. meet the particular requirements of the It has also been represented to me Borneo States and I shall be intro­ that some protection should be given 2471 16 DECEMBER 1963 2472 to domestic servants, and there are few words on the general subject of many employers of such servants who Malaysian income tax law. would like to provide protection for At present there are four separate them if the law could permit them to Income Tax Ordinances: one each in do so. There is an aspect of domestic the States of Malaya, Singapore, Sara­ service which, after consideration, we wak and Sabah. These Ordinances all feel would make the compulsory inclu­ differ one from the other. Some of sion of all these employees in the these differences are small, some are E.P.F. difficult. In this country, it is fundamental. The aim is to produce sometimes the practice for the more one unified Malaysian Income Tax fortunate members of the community Act as soon as possible but Honour­ to provide homes, maintenance and able Members will appreciate that pocket money for their less fortunate some considerable time must elapse relatives in return for household ser­ before this can be done having regard vices. To define the precise limits of to the dissimilarities I have mentioned such employment would involve per­ and to the transitional problems which sonal enquiries which could be unwel­ will be thrown up. The production of come to both parties. such unified legislation does not, of In these circumstances we have course, imply the immediate introduc­ decided to introduce legislation to per­ tion of identical reliefs and rates of mit domestic servants to have contri­ tax throughout the whole of Malaysia. butions paid in respect of them pro­ I have very much in mind the assu­ vided that the domestic servant, at the rances conveyed to Sarawak and Sabah commencement of employment, in­ in paragraph 24 of the 1962 Inter- forms his employer and the E.P.F. Governmental Committee Report. Board that this is his wish. The In the meantime, study has been employer will then be required to pay given to the possibility of extending to his contributions as well. It is hoped to Malaysia as a whole the system of work out special arrangements to reduce combined income assessments which at the formalities and form-filling by present operates as between the States employers of domestic servants to a of Malaya and Singapore. It has been minimum. It may, however, be found decided that such an extension is not from actual experience that the diffi­ practicable. A certain measure of culties of treating domestic servants in simplification has however been devised the same way as all other employees for companies resident in Malaysia. for this purpose are not as great as The existing scheme of combined expected. In such case, it will still be income assessments will be retained as possible to amend this legislation sub­ between the States of Malaya and sequently and make it compulsory for Singapore for all taxpayers resident in such employees and their employers to these territories, but, subject to that, contribute to the Fund. It is, therefore, the income of a Malaysian company expected that, by the end of 1964, all will be taxed only in the territory employees will have the benefit of from which it is derived and not again E.P.F. coverage. (Applause). in the territory of the company's In this connection I am sure the residence even though remitted there. House will be pleased to hear that, The necessary legislation will be intro­ at its meeting on 10th December, 1963, duced to give effect to this simplifi­ the E.P.F. Board, having paid a rate cation. of interest of 4 per cent for the last I turn now to my specific proposals three years, which is the highest rate for income tax changes all of which paid by any national provident fund, will have effect for assessment year has found it possible to declare a rate 1964. of 5 per cent for the current year. I propose to amend the Malayan (Applause). Income Tax Ordinance so as to increase Before I turn to my specific pro­ the rate of tax payable by non-resident posals for income tax changes, Honour­ persons from 30% to 40%. Companies able Members may wish me to say a in the States of Malaya deduct tax at 2473 16 DECEMBER 1963 2474

40% from all dividends which they (c) non-resident pensioners of Govern­ pay. With a non-resident tax rate of ment, the Railway Administration 30%, it has been necessary to repay and such other bodies as I may 10% of the tax deducted from all such approve; and dividends paid to a non-resident indivi­ (d) individuals resident in Malaysia dual in whichever country of the world who have income arising in cer­ he resides. These repayments will now tain of the Malaysian territories cease. The position will then be that other than the territory in which the dividend tax and the non-resident's they reside. tax will be in balance throughout Malaysia. It is perhaps necessary to say a special word about the pensioners to whom I At the same time, the rate of tax propose to extend this special non­ payable by trustees and executors in resident relief. Excluding pensioners the States of Malaya and in Sabah will resident in Britain who are already similarly be increased from 30% to entitled to relief under our Double 40% which is the rate levied in Singa­ Taxation Agreement with that country, pore. Not all trust income will, of there are some 6,000 Government pen­ course, effectively be liable to tax at sioners living in other parts of the 40%. The Ordinances already provide world, for example India and Australia, that the charge on the trustee may be who, if special provision were not made abated on any share of trust income to for them, would at once be taxed at which a beneficiary is entitled, or alter­ 40% on their pensions. These pen­ natively, that the beneficiary may be sioners, because of the service they allowed a set-off for the tax paid on his have rendered to this country, have a share of the trust income. special claim on our consideration. I These relief provisions will remain in have therefore decided that they should force and no beneficiary of a trust enjoy a measure of relief from the full estate will, because of the change, be rigour of the non-resident tax rate of faced with a greater tax bill than he 40%. now pays on the share of the trust The taxation in Malaysia of the pro­ income to which he is entitled. The fits of non-resident shipowners and air widow, for example, whose only income transport operators is anomalous and is a share of trust income so small that in need of overhaul. At the moment, if she now receives it without paying any the country from which the non­ tax will not be affected at all by the resident carries on his business of ship­ increase in the trustee rate of tax. ping or air transport, exempts British As regards non-resident individuals, shipping or air transport profits, we are under the present law they can claim a obliged to give a corresponding exemp­ very substantial reduction of their tax tion in Sabah and Sarawak without bills in the States of Malaya, Singapore ourselves enjoying any reciprocal ad­ and Sabah if they are British subjects vantage. In Singapore a somewhat or British protected persons. As a result similar automatic exemption is pro­ of this, Malaysia is committed to repay­ vided. The time has now come to ing tax to the citizens of any Common­ remove these exemptions which are wealth country, whether or not that clearly inconsistent with the indepen­ Commonwealth country grants reci­ dent status of Malaysia. procal relief to Malaysian citizens. I I therefore propose to amend the propose to terminate this one-sided Ordinances of those three States and to arrangement. In future, the only indivi­ provide that in future exemption of duals who will be entitled to this non-resident shipping and air transport special relief will be: profits will be accorded only under (a) non-resident citizens of Malaysia; Double Taxation Agreements entered (b) residents of other countries with into by Malaysia. This will bring all whom we have concluded Double Malaysian Income Tax Ordinances Taxation Agreements which pro­ into line, for, Honourable Members will vide reciprocal treatment to recall, the kind of change I have just Malaysian residents; outlined was made effective in the States 2475 16 DECEMBER 1963 2476 of Malaya by section 6 of the Income imposing any such ceiling would not in Tax Act, 1962. any event be large, I am not at the The combined yield from the increase moment convinced that its advantages of non-resident rate and trustee's and would offset the type of inequality to executor's rate to 40% in the States of which I have just referred, but as I have Malaya and the withdrawal of propor­ said, this matter is still under active tionate reliefs from non-resident indivi­ study. duals in the States of Malaya, Singa­ I am making a number of adjust­ pore and Sabah is expected to bring in ments to the Customs Tariff in the an additional $2 1/2 million a year. The States of Malaya of which all, with one withdrawal of tax exemption from non­ exception, are for the purpose of resident shipping and air transport in harmonising the rates of duty between Singapore, Sarawak and Sabah is esti­ Malaya and Singapore. As Honourable mated to yield an additional $2 million, Members will be aware, the duty on but this figure is highly conjectural petrol has already been increased in because there is little reliable and first­ Singapore from $1.20 to $1.30 a gallon. hand evidence on which to base a firm This will also serve the purpose of calculation. harmonising the tax rates. Honourable Members will recall that in the early part of this year, by section I will first mention the one item 2 of the Income Tax Act, 1963, exemp­ which is not directly concerned with the tion from income tax was provided for harmonisation of Malaysian tariff rates. one residence owned and occupied by I propose to levy a duty of $2 a any taxpayer in the States of Malaya. gallon on turpentine spirits, wood tar I now feel that a similar exemption (naphtha) and composite solvents and should be provided for one residence thinners. These are all items which are owned and occupied by taxpayers in used in the paint industry and are at Singapore and in Sabah. In Sarawak, present not subject to duty. They are of course, such an exemption is un­ largely interchangeable with methyl necessary since under the Sarawak alcohol and methanol which are already Ordinance no charge is imposed on a dutiable at the rate of $2 a gallon. It residence occupied by its owner. is reasonable that all these materials for paint making should be subject to In the course of the debate on the the same duty, so that manufacturers 1963 Bill it was suggested by one are not tempted to turn from one to Honourable Member that there should the other in order to avoid making be a ceiling to this exemption so that it their proper contribution to Govern­ provided encouragement for house ment revenue. The yield from this duty ownership by the man of modest means is expected to be $1.67 million in a full without gratuitously reducing the tax year. I should add that all figures of bill of the very rich. This suggestion expected yields or expected reductions has not been lost sight of and statistics in revenue are, unless an intimation to are being compiled of the effect of the contrary is given, those expected introducing such a ceiling. Although the to take place in a full year. proposal may well have some merit, it is not free from the possibility of As regards the harmonisation items, inequity. This is so because there has the first one involves the abolition of recently been a revaluation of properties the import duty of $20 a ton on crude in Kuala Lumpur which has, broadly natural rubber in various forms. One speaking, resulted in a large increase result of this imposition which was in the value of Kuala Lumpur proper­ first introduced in November, 1959, ties compared with those in the rest of purely as a revenue measure, is that Malaysia. It would therefore follow while rubber entering Singapore and that it would be impossible to achieve Penang Island is free of duty, similar equality of tax relief as between the rubber entering the Principal Customs owners of identical houses in Kuala Area is subject to this additional Lumpur and elsewhere. Since the addi­ burden even though such rubber is tional revenue to be expected from brought in for the purpose of remilling 2477 16 DECEMBER 1963 2478 and re-export. The cost of this conces­ raised to $16 and $15 a pound res­ sion is estimated at $360,000. pectively, giving an increased yield of The duty on sparkling wines not $50,000. exceeding 42 per cent of proof spirit is As I have already stated, the purpose at present $40 a gallon at the full rate of these changes is to harmonise the and $30 at the preferential rate for tariff in Malaya with that prevailing in wines imported from the Common­ Singapore. The effect of the changes is wealth. I propose to raise these rates small and is not likely to affect to $44 and $34 a gallon respectively anyone's pocket very seriously, which are the rates at present in force (Laughter). in Singapore. This is estimated to result in a revenue increase of $10,000. Together with the increase in the The rate on brandy in bottles not duty on petrol in Singapore, which will exceeding 81 per cent proof spirit is at raise a further $1,300,000 a year, the present $56 a gallon full and $49.75 a net result of the Customs duty changes gallon preferential. This will be raised for Malaysia will be an increased to $60 a gallon for the full rate and yield of $3,130,000. If we add to this $53.75 a gallon for the preferential the yield from the proposed income rate. The Singapore rates are $60 and tax changes totalling $4 1/2 million, the $54 respectively. The difference of 25 effect of the revenue proposals as a cents in the preferential rate for Malaya whole is to increase the estimated and that for Singapore has been revenue for 1964 by nearly $8 million. retained to preserve the difference Honourable Members will now want which exists at present between their to know what duty changes are respective full and preferential rates. proposed for Sarawak and Sabah. In The yield from this increase is expected the case of Sarawak revenue duties to be $60,000. were increased in December, 1962, and Gin in bottles not exceeding 81 per again in May this year, and the cent proof spirit is at present dutiable differences between the rates in force at $37.50 a gallon whatever the source in Malaya and in Sarawak are at of origin. This will be raised to $49.50 present not large. These increases are a gallon, yielding an increased revenue expected to bring in additional revenue of $200,000. There is a corresponding of the order of $9 million a year. In increase in the duty on gin imported the case of Sabah, revenue duties were other than in bottles but, as no such increased in May, 1963, and this gin is imported at present, this is exercise was expected, at that time, to unlikely to yield anything. yield an extra $800,000. It will, The duty on rum will be similarly therefore, be seen that even before increased from $37.50 a gallon to Malaysia Day, these two States had, $49.50 a gallon bringing an increased on their own, taken steps to narrow revenue of $100,000. Rum other than the gap between the Malayan tariff on in bottles is at present dutiable at the one hand and their tariffs on the $52.50 a proof gallon and this will be other. For technical reasons, it would increased to $63.50. Very little rum is not have been possible at present, imported other than in bottles, and it pending the assumption of power by is not expected that the yield will be me under the Sarawak and Sabah more than $100 in a year. Customs legislation through Modifica­ tion Orders affecting that legislation, Whisky in bottles not exceeding 81 for me as Federal Minister of Finance per cent proof spirit is at present to make duty changes today which dutiable at $56 a gallon and this will would affect these two States. We have, be increased to $60 a gallon, giving a therefore, decided that such duty yield of $100,000. changes will be made when these Cigars, cheroots and snuff (laughter) Modification Orders are in force, and are at present dutiable at $11 a pound in any case not earlier than 1st at the full rate and $10 a pound at the January, 1964. I need hardly add that preferential rate. These rates will be this rather anomalous position will not 2479 16 DECEMBER 1963 2480 obtain again, for by next year the Honourable Members will wish to position will have been rectified. know at this point to what extent the extra expenditure commitments which The Development Estimates which I have described affect the financial have already been presented to this position of the Federation as forecast House provide for a total Federal in the Second Five-Year Plan. I am expenditure for Malaysia of $722 happy to be able to say that, according million. Of this, $629 million is for to current calculations, the state of the Malaya, including about $106 million Federal reserves and the burden of the for centrally incurred expenditure national debt will be no worse at the attributable to Malaysia, $14 million end of 1965 than was forecast by the is for Singapore, $57 million for planners at the beginning of the Plan Sarawak and somewhat over $21 period. (Applause). This fortunate state million for Sabah. Receipts credited of affairs is due to Federal revenues directly to the Development Fund having turned out, in spite of the lower amount to $93 million, which is made rubber price, to be a little more up of a $60 million grant from the buoyant than expected and to the British Government for capital expen­ generous offers of grants from Britain diture on Malaysian defence, a $17.1 for capital expenditure on Malaysian million grant from the British Govern­ defence and on the development of the ment for the development of the Borneo Borneo States, and of loans for the States, a $13.5 million reimbursement latter purpose from Singapore. In the for Federal development expenditure Second Five-Year Plan, it was forecast in Singapore in accordance with the that by the end of the five-year period Malaysia Agreement, and $2.4 million we should have consumed, taking into in respect of repayment of loans issued account net disbursements from trust funds, $400 million from the reserve from the Development Fund in balances which we had been able to previous years. Subtracting this from accumulate during the last few years. the total of $722 million appropriated This was on the basis that $200 million in the Development Estimates, we was to be made available from the obtain a deficit of $629 million to be Currency Fund for investment in met by transfers from the Revenue domestic development. On the same Account and by borrowing. If we add assumption, we shall still not need to the figure of $53.7 million already call upon more than $400 million of given as a deficit on current account, our reserve balances during the period after taking into account nearly $8 of the Plan, and this in spite of the million expected to be received as a fact that the expenditure under that result of the new revenue proposals, Plan is not being reduced, but rather the overall deficit on the budgeted increased. So much for all the efforts figures of revenue and expenditure will of certain persons across the water to amount to something like $682 million. shake the economic foundations of I have stated that following usual Malaysia by confrontation. trends we could expect a $30 million shortfall on ordinary expenditure. What I have just said refers to the Similarly, experience shows that there period of the Second Five-Year Plan, is likely to be roughly a 20 per cent which ends in 1965. We have now shortfall during the year on the made a start on the preparation of a estimates of development expenditure Plan for the period 1966-1970 which resulting from unavoidable delays in would have been the Third Five-Year implementing some of the projects. Plan for Malaya and will now be the This would reduce the deficit on first Malaysian Plan. There is no doubt development account by $141 million. that the extra defence commitments A realistic estimate of the overall we have had to undertake will cast a deficit would therefore be $511 million. shadow over the plans for that period, Of this deficit, we expect to meet $226 and we shall again have to seek the million by borrowing and the remain­ assistance of our friends and of the ing $285 million by drawing down our financial markets of the world in reserves. raising the funds necessary to carry on 2481 16 DECEMBER 1963 2482 economic development and social pro­ excluded the Borneo States, which are gress at the rate which Malaysians even emptier land is still our most have come to expect as their due. I am scarce commodity. It is admittedly a confident that the Government, with precious commodity, but its value can the assistance of the Governments of only be realised if it is utilised and not all our States, both old and new, will hoarded. We have now reached the be able to surmount all those problems stage where domestic capital has to go in the same manner in which it is overseas in order to find employment manifestly surmounting the problems because of the inability of their owners of the present momentous period. to secure land for agricultural develop­ ment, and this at a time when the It will be clear from the picture Central Government has made it clear which has emerged in the course of that it welcomes increased investment my speech as a result of the facts and in the private sector of the economy. figures which have been given, that It cannot be emphasised too often that although our economy is bouyant and it is not possible for the Government growing, it will have to grow faster if by itself to achieve an adequate rate of we are to achieve our object of economic growth if only because it providing more and better social does not possess resources of the services for a population which is magnitude required. The efforts of the increasing rapidly as well. The Central Government must be supplemented by Government has done and will do private enterprise which alone can everything possible to promote this achieve the required rate of investment very desirable objective by every means in the private sector, without which in its power. In one respect, however, the efforts of the Government itself it is completely dependent on the will come to nought. The remedy support and co-operation of the State unfortunately does not lie with the Governments, and this is in the matter Central Government, and I hope there­ of land alienation. I have referred to fore that the State Governments con­ this matter in previous budget speeches cerned will be able to take a broad and and I make no apology for referring to long-term view and in this way not it again, because unless new land is only help the Central Government, but readily made available to private help the people of this country and enterprise on reasonable terms for themselves. increasing the area under cultivation, whether it be for rubber, oil palm or Sir, the Alliance Party has ruled this other crops, or for prospecting and country since independence was won eventual mining if prospecting proves more than six years ago. If we calculate promising, or for factory and plant from the date of the first general sites, or for new urban housing one of election in 1955, when the people of the most vital ingredients for increasing this country gave us a mandate in no the size of the economic cake would uncertain terms, we have been in be missing. As I have said already, not power for more than eight years. I still only will there be more of us in the remember the pre-1955 election era future, we shall want bigger slices of when literally thousands upon the cake. The only solution therefore thousands of school children were is to increase its size. There is simply turned away from schools simply no other alternative. because there were not enough teachers The Federal Government readily and there were not enough classrooms appreciates the concern of the State to go round. We promised the people Governments that first preference in of this country then that if we were this matter should go to the landless returned to power we would assure a and to the small man, but there should place in school for every child of be enough in this country to satisfy school-going age, whatever the cost the needs both of the small man and of may be, and even if we had to use the large investor. It is ironical that in attap sheds as classrooms. We were a country in which three-quarters of returned and we kept that promise. the total land area is still under virgin (Applause). In that year, the Central jungle, and in this context I have Government provided $138 million for 2483 16 DECEMBER 1963 2484 education and health, two of the most order of $2,075 million or nearly three vital prongs of our social services and times greater than the comparable this expenditure was equivalent to 20 investment for the previous five-year per cent of total Federal recurrent period. (Applause). In the field of expenditure. In 1964, expenditure on housing, it is our aim that as many these two Heads will amount to about people in this country as possible $355 million and account for 30 per should, as rapidly as possible, have a cent of the Ordinary Budget. In other house which they can call their own words, there has been an increase of and thus make our goal of a property- nearly 160 per cent. (Applause). We owning democracy a living reality. We have progressed from a position where inherited from the British a reasonably we could not even provide places for healthy economy. We have in these children who were prepared to pay to years of power not only narrowed the free primary education for all, but we gap between the "haves" and the are not stopping here. The Govern­ "have-nots" in our society, we have ment has already announced that it achieved this without eroding the intends to institute a "crash" pro­ strength of our economy in any way. gramme so that those who have to (Applause). We have achieved growth leave school at the end of their primary without inflation, a phenomenon which course will be given adequate technical is rare in the past decade. We have training of the right kind to fit them not only promised, we have accom­ for the business of earning their liveli­ plished. (Applause). We have success­ hood in their adult years. (Applause). fully scaled the heights of achievement In the field of health services, it is but our aim is to ascend to higher our firm intention to institute a sick­ peaks of endeavour. (Applause). That ness insurance scheme so that those is the measure of our success, that is breadwinners who are unlucky enough the magnitude of our achievement. We to be struck down by serious illness can today look back over those years will not have to suffer an additional and say with truthfulness and not a burden for themselves and their little pride, "No Government could children in their hour of distress. In have done better". (Applause). the field of development expenditure, Sir, I beg to move. (Applause). the Federal Government invested only $738 million during the whole period Tun Haji Abdul Razak: Sir, I beg of the First Five-Year Plan from 1956- to second the motion. 1960. In 1961 itself, the Federal Mr Speaker: Pursuant to the provi­ Government invested $141 million. sions of Standing Order 66 (2), the Next year we have budgeted for a figure of $629 million. The planned debate on the motion for the Second Federal Government development Reading of the Supply Bill (1964) will expenditure for the years 1961-1965 be adjourned to Thursday, 19th exclusive of what could properly be December, 1963. attributed to Malaysia will be of the Adjourned at 430 p.m.