That is most certainly not correct on the part of your accountant. The Companies Act says you have to pay out of profits, but this is what retained earnings are... profits. What the Companies Act prohibits is selling shares to the public to pay for dividends, selling treasury stock to pay for dividends, and a few other situations. Bottom line: You can't get money for shares and use it to pay dividends.
https://sso.agc.gov.sg/Act/CoA1967#pr403-
Your accountant is mis-characterizing what the section means about "profits"... nothing in there to construe current year profits only. You can make a profit for 3 years in a row and never pay a dividend. It's all retained earnings. You can make a loss in year 4 and pay out a dividend from your retained earnings.
Think about this: What if your company paid no dividends for 3 years, and made $200,000 profit each year as retained earnings. How else would you get your money back out of the company to shareholders, except through dividend payments from prior year's retained earnings?
In fact, from the Companies Act:
Nothing in subsection (1) or (1A) prohibits —
(a) a distribution of a company’s assets by way of dividends lawfully made;
Those assets would include cash from prior year's profits, the sale of assets like buildings and machinery.
I'd note that this would also cover taking a loan against assets to make a dividend payment in lieu of sufficient cash.
You'll want to look at this for all the gory details about companies. Check out the dividends section.
https://sso.agc.gov.sg/Act/CoA1967