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Apart from the above measures, the Government recognises that there are circumstances where free competition may not be practicable, for example circumstances
(a)
where a very high level of investment is required;
(b)
where there is a need for prudential supervision; or
(c)
where there is a need to protect the long-term interest of consumers.
In such cases, through the use of various instruments, the Government will need to achieve a reasonable balance between a justified monopolistic or oligopolistic situation on the one hand, and the benefits of quality services and fair prices on the other.
In respect of the sectors in the economy which are subject to Government controls, a key imperative in the formulation of such controls is the promotion of competition and protection of consumer interests. These controls are reviewed and revised from time to time to identify areas for possible improvement and to meet the needs of changing circumstances. The Government has taken a sector-specific
approach to promote greater competition in the relevant business sectors.
Since 1993, the Government has provided funds to the Consumer Council, for the
purpose of conducting a series of studies on the state of competition in six major business sectors affecting the daily life of the general public, namely: banking, supermarkets, domestic water heating and cooking fuel market, telecommunications, broadcasting, and residential property market. So far, the Consumer Council has published five sector-specific study reports. The remaining one on residential property market will be published very soon. The Government is committed to publishing a Government Response to each sector-specific study report within six months of its release.
The Government has responded, positively and constructively, to these reports. We have already provided responses to the studies on banking, supermarkets, and the domestic water heating and cooking fuel market. Major recommendations accepted by the Government and the progress of their implementation include -
(a) removing the interest rate cap for time deposits in phases. The liberalisation of interest rate commenced in October 1994. Since November 1995, the interest rates for deposits fixed for 7 days and longer have been deregulated. The deregulation has been a success. Over 99% of the retail time deposits have been deregulated without causing any adverse impact on the stability of the banking industry. Consumers have benefited from wider access to market interest rates and the banking system has absorbed the effects of the deregulation well;