Extract of Parliament Report - 5th Feb, 2009

COMMITTEE OF SUPPLY DEBATE

PRIME MINISTER’S OFFICE

Developing Financial Literacy

      Miss Penny Low (Pasir Ris-Punggol GRC): Sir, what are the root causes that led to the recent structured products fiasco?  It is greed and lack of financial literacy.  Many people lost their nest egg.  In 2008, the total debts to individuals in Singapore stand at $112 billion, 10% more than 2007.  Credit card debt alone stands at $3.3 billion and worldwide, credit card debt has been growing fast and even threatens to be the next sub-prime.  Sir, since my first speech in Parliament, I have made repeated calls for national financial literacy programmes.  I am happy with the MoneySense Program but judging from the recent financial fiascos, the MoneySense Program isn't sufficient.  Hence, I am making urgent calls for two additional suggestions.

      One, perhaps we can equip every household with a basic financial literacy handbook - much like the case of an emergency handbook; and life skills that can help them do basic financial planning whether in good or bad times.

     Two, I propose setting up a high-level National Financial Literacy Advisory Council, perhaps under the PMO, to co-ordinate efforts to work with the public, private and people sector to accelerate financial education efforts for youths in school, adults in the workplace, homebuyers and retirees in the CPF queues, homemakers and self-employed who are found everywhere.  In addition, the council can help improve understanding of financial services, create national financial literacy barometer, conduct research and strengthen financial education programs.

      Sir, let me reiterate that financial literacy can help to smoothen consumption, provide for better education and health needs, save individuals from their financial headaches and family heartaches and also provide capital for entrepreneurship.  Most of all, it would also help to lighten the Government's load on the financial security that needs to be set aside for an ageing population.

     The Minister for Trade and Industry (Mr Lim Hng Kiang): Mr Chairman…Ms Penny Low asked about what we can do to enhance the financial education of Singaporeans.  We agree that financial education is very important and as Ms Penny Low pointed out, we have a program called MoneySense that's been in place since October 2003 and we have set up a Financial Education Steering Committee or FESC to drive this effort.  This Steering Committee comprises CPF Board, the Ministry of Education, the MAS, Ministry of Manpower, MCYS, People's Association and the National Library Board.  The Committee has been fairly effective, setting strategic directions to financial education initiatives and coordinating the efforts of the various agencies.  For example, the different agencies will spearhead specific programmes to target different groups under their purview.  For instance, the Ministry of Education promotes initiatives for the students, CPF Board for the pre-retirees, PA for community groups and low-income families, MAS for working adults, MCYS for senior citizens and the National Library Board for the general public.

       The Steering Committee also works closely with the financial industry associations, partners such as the Security Investors Association (Singapore) (SIAS), Council for the Third Age, NTUC, Singapore Exchange and CASE to develop, implement and fund the various programmes, and the programmes cover a wide range which include seminars, games, publications of guides as well as national financial literacy surveys.  So we have the structure in place and we will continue to evaluate this and see whether there is a need for setting up a high-level council as Miss Penny Low suggested to drive this and to give it a higher impetus.  Not all solutions need to be solved by kicking it up.  So, we will evaluate the effectiveness of this Steering Committee before we embark on this suggestion of a national council.