Maritime and Port Authority of Singapore (Amendment) Bill

Order for Second Reading read.

2.02 pm

The Senior Minister of State for Health and Transport (Dr Lam Pin Min) (for the Minister for Transport): Mr Speaker, on behalf of the Minister for Transport, I beg to move, "That the Bill be now read a Second time."

The port is a strategic national infrastructure. It is not just a facility where we import most of our daily necessities. More importantly, the port provides the global connectivity that drives our economy, helping to fuel the growth of sectors, such as logistics, manufacturing and wholesale trade. Hence, the Government has made, and will continue to make, significant investments in developing port infrastructure; for instance, in the development of a new container terminal in Tuas with a capacity of up to 65 million Twenty-Foot Equivalent Units (TEUs). Our investments in the port over the years have paid off. Today, Singapore is the world’s largest transhipment hub, recognised for our reliability and efficiency. We have won the Asian Freight, Logistics and Supply Chain Best Seaport (Asia) award for 29 years in a row.

Given the strategic interests at stake, it is important for the Maritime and Port Authority of Singapore (MPA) to have oversight on changes in substantive equity control in licensees that provide essential services at the port. The intent is not to control the day-to-day operations of these licensees, but rather to require MPA’s approval to be sought for transactions in equity interest that would materially change the equity control of these licensees.

This Bill thus seeks to amend the Maritime and Port Authority of Singapore Act to give effect to this proposal. Let me highlight the key provisions of the Bill.

Clause 8 gives MPA the powers to reject an acquisition or disposal of equity interest in key designated entities if it deems the acquisition or disposal to be detrimental to the interests of the port. These designated entities include designated public licensees, designated business trusts and designated equity interest holders.

Under the Bill, designated entities will be subject to three key controls relating to changes in equity interest in the entities. First, any person acquiring interest that would result in the person holding 5% or more of the total interest in a designated entity will be required to notify MPA.

Second, any person intending to acquire 25% or more, or 50% or more, of the total interest in a designated entity, will be required to obtain prior approval from MPA.

Third, any person intending to dispose interest that would result in that person’s shareholding falling below 75% or 50% of the total interest in a designated entity will be required to obtain prior approval from MPA.

The Bill will amend the MPA Act in two other areas.

Today, vessels operating in the reservoirs of Singapore are licensed by the Public Utilities Board (PUB), taking into account MPA’s technical inputs on safety requirements. As the authority for the safety standards of marine vessels, MPA should set the safety standards for vessels operating in reservoirs and other inland waterways.

Clauses 4 and 9 of the Bill grant MPA the power to set such safety standards. MPA will work with PUB to develop and implement these safety standards. This will enhance the overall safety in reservoirs and inland waterways for all.

Finally, clause 3 removes the cap on the number of MPA Board members. This will provide greater flexibility for the Minister to appoint more members as he deems appropriate to bring in the relevant experience and expertise as needed onto the MPA Board. Mr Speaker, Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Dennis Tan.

2.07 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mr Speaker, a major part of the amendments in this Bill is none other than the introduction of a new part 12 relating to the control of designated public licensees, designated business trust and designated equity interest holders. The new part 12(a) which includes section 86 A to L is being introduced, notwithstanding the existing provisions in, say, sections 81 to 89. The existing sections 81 to 89 already provide guidelines on conditions to be set upon grants of public licences. For example, section 81A provides that conditions in the public licence may contain control and restriction directly or indirectly on the creation, holding or disposal of shares in the public licensee.

The new part 12(a) sets up new, detailed and onerous requirements, including an obligation for a person becoming a 5% controller of a designated entity to notify the authorities and a person needing to seek prior approval before becoming a 25% or 50% or 75% controller or an indirect controller of a designated entity. There are various remedial directions which can be given by the authority when there is a breach. There is a very detailed section on what it means to be an associate or subsidiary for purposes of determining direct or indirect control of a designated entity.

I would like to understand more about the rationale for the introduction of these requirements, specifically because the change is very substantial and the requirements that are now in place in the draft provisions are very onerous. So, I would appreciate if the Senior Minister of State can explain a little further as to why such onerous requirements from the licensees are in this Bill.

Mr Speaker, I would also like to ask the Senior Minister of State whether there was any incident in the recent past relating to the change of control of existing public licensee or business trust which might have had some adverse implications on the operations of any licence or services in question or on our ports or the security of our ports, for that matter, which may have spurred the Government to introduce these new onerous requirements. If so, I would appreciate if the Senior Minister of State can share with the House the details of any such past incident.

Under the existing provisions, if there is any contravention of the conditions for a public licence, the authority may cancel or suspense his licence or require the payment of a fine as he thinks fit. I am referring to section 84(1). I am not in favour of any fine that can be decided at the complete discretion of the authority, which is the existing law. Unfortunately, section 84(1) will remain. What is worse, in my view, is that under the proposed section 86(i), the proposed punishments, including fines, is not exceeding $500,000 or $1,000,000 and imprisonment of three years, or both fine and punishment, are very heavy penalties, indeed. I would be grateful if the Senior Minister of State could explain the need for such heavy punishments.

Mr Speaker, the new section 86E empowers the authority to designate public licensee, the relevant business trust managed by a trustee manager who is a public licensee or a person who holds equity interest in any public licence or business trust, as a designated public licensee, designated business trust or designated equity interest holder. Such designation may only be made by the authority after consultation with the Minister if he considers that it is necessary in the public interest.

Mr Speaker, in respect of this section, I would like to seek the Senior Minister of State's clarifications. One, I would like to know why there is a provision for designated public licensee, business trust and equity interest holders. Two, what qualifies for, as I quote from the Bill "necessary in the public interest"? Will the Senior Minister of State please elaborate on the considerations which will be taken into account when the authority is making such designations? Will the Senior Minister of State be able to share any examples? Next, why are the considerations not set out expressly in section 86D? Finally, would such a bare provision not affect the consistency and certainty of this application or even be subject to abuse?

Next, Mr Speaker, the proposed section 86E requires that if a person becomes a 5% controller of a designated public licensee holder, designated public trust or designated equity interest holder as a result of an increase in the holding of equity interest or in the voting power controlled by that person or any associate of that person, he must notify the authority in writing. Again, I would like to ask the Senior Minister of State what is the rationale for this. Would the new provisions in section 86F requiring persons to seek prior approval before becoming a 25%, 50% or 75% controller of designated entities be sufficient?

Next, I move on to the regulation of inland craft. This is another important change. What the Bill seeks to do is to have MPA regulate inland watercraft, a role which will be taken over from PUB. Under the new part 13A of this Bill, MPA will take over the regulatory roles relating to construction, maintenance, safe operation and navigation and the crew manning requirements and other aspects of inland craft. Permits for use on inland waterways and reservoir remain under the authority of PUB, and rightly so. This is a change in the right direction as MPA is the more appropriate authority for water borne vessels and craft.

Mr Speaker, I would like to seek some clarifications from the Senior Minister of State. Operationally, how will MPA ensure that, on the ground, all vessels or inland crafts operate safely and in compliance with all regulations governing safe operation and navigation in the reservoirs and inland waterways? Will PUB still be working with the MPA in this area? If so, what will be their role on the ground? Mr Speaker, notwithstanding the clarifications I am seeking, I support this Bill.

Mr Speaker: Mr Louis Ng.

2.13 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, our waterways are our precious assets. They are our iconic tourist spots, venues for sports and our sources of drinking water.

Hence, I believe any amendments to the MPA Act must augment the way the MPA governs and administers matters in relation to the responsible and safe use of our precious assets. While I congratulate the Ministry on this well-drafted Bill, I hope to obtain some clarifications.

First, I agree that the expansion of the functions and duties of the Authority by including the regulation of the operation and safety of inland craft is necessary. After all, we wish to ensure that our waterways will be used responsibly. But since possible regulations have not been announced to the public, I wish to seek some clarifications.

Can the Senior Minister of State clarify if any regulations on the use of engines for vessels in reservoirs are in the pipeline? According to Eugene Heng, the Founder and Chief Executive Officer (CEO) of Waterways Watch Society, “We are currently permitted to operate vessels with four-stroke engines, battery-operated electric vessels, or solar-powered vessels. We hope this will continue.” Eugene explained that a blanket change to battery-operated or solar-powered vessels would increase costs significantly for smaller operators.

Further, many operators do not have access to the required charging facilities at their jetties. Any arrangement for such charging will invariably lead to higher operating costs. He added that changing nine vessels that are of four-stroke engines to battery or solar-powered ones will cost at least $300,000 to $400,000. Installation of charging facilities at jetties, after obtaining the relevant permission from the authorities would cost another $50,000.

In view of the cost concerns that operators may face in possible regulations of engines, I hope that extensive consultations will be made with Waterways Watch Society and other non-government organisations (NGOs) and companies, and that any regulations will be done gradually. If such changes are necessary, I also hope the Ministry will provide some grants to the NGOs to help offset the costs.

Next, as it stands, all powered harbour craft must be installed with either a Harbour Craft Transponder System (HARTS) or Automated Identification System (AIS). I have also received some feedback from the Waterways Watch Society in relation to this. They have requested that this requirement should be reserved for vessels that are operating in the seas only. They explained that vessels are easily identified in reservoirs since these water bodies are not large. Hence, can the Ministry clarify the rationale for this requirement for vessels in reservoirs or water bodies of similar sizes?

Lastly, being precious assets of Singapore, I believe that it is of paramount importance that our waterways remain free from pollution.

Taking a leaf from the European Code for Inland Waterways, Chapter 10 therein provides for the prevention of water and disposal of waste generated on board vessels. The articles in Chapter 10 make explicit prohibitions on discharging and dumping, collection of waste, and places obligation on the boatmasters and crew members to exercise care to avoid polluting waterways and to restrict the amount of waste generated on board the vessels.

I understand that something similar to Chapter 10 of the European Code exists in Parts 2 and 3 of the Prevention of Pollution of the Sea Act. However, it appears that there is no requirement in the MPA Act and the Prevention of Pollution of the Sea Act, for the boatmaster and crew members to exercise the said care. In view of this, can the Ministry consider making such regulations or amendments in the future?

I am supportive of placing such obligations on such users of the waterways who are likely sources of pollution, in order to protect our waterways for the benefit of the environment and other stakeholders. Hence, I hope that the Ministry will seriously consider making such regulations.

Sir, the proposed amendments of the Act are definitely welcome. I trust that the amendments have been drafted with the best intentions to ensure that our waters will be used responsibly and safely.

I hope that extensive consultations with the stakeholders will be done before any regulations take effect and that changes, again, will be gradual. With that, I stand in support of this Bill.

Nr Speaker: Senior Minister of State Lam Pin Min.

2.18 pm

Dr Lam Pin Min: Mr Speaker, Sir, I would like to thank Mr Dennis Tan and Mr Louis Ng for their comments and support for the Bill. Let me address the points raised.

As I mentioned in my speech earlier, our port is a national strategic infrastructure. The Government has made significant investments in developing the port. And we will make even greater investments, especially in building up Tuas Terminal, over the next few decades.

The intention of the equity control requirements is not to interfere with the day-to-day operations of the designated entities or restrict its commercial flexibility, but rather to require MPA’s approval to be sought for transactions crossing stipulated significant thresholds in equity interest.

Mr Tan also asked how MPA decided on the 5%, 25% and 50% acquisition thresholds, and the 50% and 75% disposal thresholds. Under the Companies Act, a 5% shareholder is considered a substantial shareholder. Although a 5% shareholder typically does not have significant powers to drastically influence the direction of a company, it is still important for MPA to be informed of any new substantial shareholders of its designated public licensees.

Shareholders with 25% or 50% interest, however, wield significant voting power in a company’s decisions. A shareholder who has more than 25% equity interest can veto special resolutions under the Companies Act. A shareholder with more than 50% equity interest can pass ordinary resolutions. These are the reasons why MPA should have some regulatory oversight on shareholders seeking to reach 25% and 50% of the equity interest respectively.

On the other hand, a shareholder will lose its ability to control special resolutions if its equity interest falls below 75%. It will lose its ability to control ordinary resolutions if its equity interest falls below 50%. As these are important corporate decisions that could impact the overall direction of the company, MPA should maintain oversight on whether it is in our national interest for any incumbent shareholders to relinquish such voting powers.

I would like to add that the disposal and acquisition of controls are not duplicative. The acquisition controls enable MPA to have oversight of single persons becoming a new major shareholder of a designated entity. The disposal controls grant MPA oversight of existing shareholders from selling interest in a designated entity, whether to a single or multiple persons.

Mr Dennis Tan also asked whether the thresholds set are too onerous. But, in fact, we are at most on par with those with similar legislation for other sectors, and they are not more stringent.

Currently, vessels operating in reservoirs of Singapore are regulated and given permits to use the inland water bodies by PUB. MPA is the authority for safety standards for marine vessels and thus has the relevant expertise and experience and is in a good position to assume the responsibility for setting the safety standards for vessels operating in reservoirs and inland waterways. This will further enhance safety of navigation in these water bodies. PUB will continue to be the authority to issue permits to vessels for use in reservoirs and inland waterways for the purpose of water quality control, protection of reservoir infrastructure, controlling the types of activities in these water bodies and preventing social disamenities.

Mr Louis Ng asked whether the Bill will require inland vessels currently fitted with four-stroke engines to switch to other engine types, such as battery or solar-powered ones. PUB, which remains as the overall manager of reservoirs and inland waterways, will continue to allow vessels with four-stroke engines to operate in these water bodies.

Mr Louis Ng also asked if MPA intends to require inland water vessels to be fitted with AIS transponders. I agree with Mr Louis Ng that there is no need at this point to require inland water vessels to install such equipment.

I share Mr Louis Ng’s concern for the environment. PUB already has existing measures to safeguard against the pollution of our waterways from vessels. For instance, PUB’s regulations prohibit inland water vessels from discharging wastewater and other pollutants. These measures have been effective in keeping our reservoirs and waterways clean. Hence, there is no need to amend the MPA Act or the Prevention of Pollution of the Sea Act to preserve the pristine conditions of our water bodies.

Lastly, on the question by Mr Dennis Tan about why we are legislating the equity interest holders as well as the business trust. In many instances, it is the parent company that would have the power to control key decisions of the licensee. So, for the legislation to be effective, MPA must have the powers to go beyond just the public licensee to the shareholders as well.

Mr Speaker, Sir, the maritime sector is, and will continue to be, a key pillar of Singapore’s economy. This Bill not only better positions MPA to safeguard our strategic port interests but also enhance the overall safety in reservoirs and inland waterways for all. Mr Speaker, I beg to move.

Mr Speaker: Mr Dennis Tan.

2.25 pm

Mr Dennis Tan Lip Fong: Mr Speaker, I just want to ask the Senior Minister of State to clarify. I think he may have missed out my question. Regarding section 86D, designating public licensee, my questions include (a) I would like to know why there is a provision for a designated public licensee and what would qualify as necessary in the public interest. Will the Senior Minister of State be able to share any examples and, if not, why are the considerations not set out in the section itself? Would the consideration be set out in any subsidiary legislation?

Dr Lam Pin Min: I would like to thank Mr Dennis Tan for the supplementary question. MPA will have to decide which are the public licensees that are to be designated. At this point in time, we are looking at the port operators, the terminals. But, of course, if we deem that there are certain other areas within the maritime sector that require the designation of being the designated public licensee, we will put in measures to ensure that as well.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Dr Lam Pin Min.]

Bill considered in Committee; reported without amendment; read a Third time and passed.