Significant Investments Review Bill

Order for Second Reading read.

Mr Speaker: Minister for Trade and Industry.

The Minister of State for Trade and Industry (Mr Alvin Tan): Mr Speaker, the Minister for Trade and Industry is on his way and will be here momentarily.

Mr Speaker: Alright. Will that be momentarily?

Mr Alvin Tan: Within a minute, Sir. He is here, Sir.

Mr Speaker: And that is the definition of "momentarily". Minister for Trade and Industry.

12.58 pm

The Minister for Trade and Industry (Mr Gan Kim Yong): Sir, I apologise for being late. I think you are very efficient, so the earlier Ministerial Statement has progressed very quickly.

Sir, I beg to move, "That the Bill be now read a Second time."

Sir, Singapore is an open economy, well connected to the rest of the world. This has allowed us to become a vibrant business hub and an attractive investment destination. We must remain open and continue to attract new investments so as to grow our economy and create good opportunities for our businesses and our people.

However, we also recognise that the world has become increasingly complex and the economic environment more uncertain and challenging, creating new risks and vulnerabilities. We must constantly review and update our regulatory regime to keep pace with the changes in the global economic landscape and to strengthen the resilience of our economy in the face of new threats. Doing so will give our investors and businesses added confidence in our economy and our ability to respond to emerging challenges.

Indeed, as an open economy, we can be vulnerable to actors that may seek to undermine our national security interests through ownership and control of critical business entities. Therefore, we must put in place adequate measures to safeguard our national security interests.

In fact, we have been doing so through our sectoral legislation to mitigate such risks specific to the respective sectors. For instance, the Banking Act and Telecommunications Act require approval to be sought before a party acquires 12% of shares or voting power and before appointment of key personnel, such as the chief executive officer. This will help prevent actors from influencing critical entities in the financial and telecommunications sectors to undermine their stability and threaten our national security.

We have taken a calibrated and balanced approach, which has enabled us to ride the winds of globalisation and benefit from the growth of the global economy. In recent years, we have seen several global financial crises that threatened to undermine the stability of economies and societies. We have lived through the COVID-19 pandemic that led to border restrictions and shortages of essential medical supplies. There is also increased use of protectionist measures amidst geopolitical contestations. Military conflicts have also brought about disruptions to critical supplies, such as energy and food. This has led to many countries prioritising domestic and national security considerations, leaning towards "near-shoring", "friend-shoring" and "re-shoring" of supply chains. Against this backdrop, it is timely that we update our investment management toolkit to ensure it remains adequate and effective.

We are not alone in doing this. According to a 2023 United Nations report, at least 37 countries have introduced regulatory frameworks for the screening of investments on national security grounds since the 1990s. More recently, countries like Australia, China, Japan, Ireland, the United Kingdom (UK) and the United States (US) have introduced or enhanced their investment management regimes, with more planning to do so.

Investors in a critical entity will normally have some form of influence or control of the entity’s decisions and operations. Investors may then exploit their ownership and control over these entities to disrupt the delivery of essential goods and services, or access and use sensitive information to threaten our national security.

It is, therefore, important to have adequate and effective investment management measures to safeguard our national security and ensure our economy remains resilient. This will provide businesses and investors with continued confidence in Singapore as a stable, trusted and well-connected global business and investment hub.

While the sectoral legislation we have today has served us well, we need to continually assess our security needs and strengthen our safeguards, where necessary.

The Significant Investments Review Bill is designed to complement the existing suite of sectoral safeguards, by introducing a new investment management regime. In designing this regime, we have studied the investment management legislation of other jurisdictions. We have also taken into account our current sectoral legislation. Allow me to share three key principles in the design of the Bill.

First, the legislation should strike a careful balance between protecting our national security interests and minimising the impact on businesses and investors. Second, the Bill should apply to both foreign and local parties, while focusing on national security considerations. Third, the processes should be as transparent as possible, while taking into account national security considerations.

Sir, let me now explain the key features of the Bill. I will cover three segments. First, provisions that apply only to designated entities. Second, provisions that apply to entities that have acted against Singapore’s national security interests, regardless of whether they have been designated. Third, other general provisions.

I would like to make it clear from the outset that, it is not the intention of the Government to directly interfere with the routine commercial decisions and operations of designated entities.

The first broad set of provisions relate only to ownership and control over designated entities to ensure the reliability of critical functions that they provide as well as to safeguard Singapore's national security interests.

Clause 17 allows the Minister to designate a specific entity based on national security considerations. This is quite unique to Singapore, as most overseas jurisdictions generally scope the designation broadly to cover all entities based on either activities they carry out or the sectors they operate in.

Common overseas examples of these activities or sectors include those relating to communications, defence-related supply chains and advanced technologies. Most entities within these sectors or performing such activities will be regulated.

But for Singapore, as the majority of critical entities here are already covered by existing sectoral legislation, we expect to designate only a handful of entities. This approach was deliberately chosen to reduce the regulatory burden of the Bill. Otherwise, every entity that falls within certain sectors or provide certain activities would all be included, regardless of whether the entity itself is critical to our national security interests. This would not only be administratively tedious but also impact Singapore's position as a business and investment hub. Instead, our targeted approach to designate only specific entities will achieve a better balance between national security and the impact on businesses.

In deciding which entities should be considered for designation, various factors will be considered. These include whether the entity provides a critical function in relation to Singapore's national security interests, such as a key provider of security-related functions, especially where there are few or no alternatives; and whether it is adequately covered by existing sectoral legislation. Conversely, should a designated entity subsequently cease to meet these criteria, its designation may be cancelled. Over the last few months, we have reached out to all the entities that are being considered for designation. That means, if you have not been approached, you are not currently being considered.

The engagements will help us to better understand their perspectives and concerns, clarify the obligations should they eventually be designated and explore ways to mitigate the regulatory impact on their businesses.

In the interest of transparency and to provide certainty to the entities and potential investors, clause 17 provides that all designations or cancellations of designation will be notified in the Gazette.

Clauses 18 to 20 allow the Minister to exercise oversight over the ownership or control changes involving parties in positions to influence and direct the actions of the designated entities. These requirements will not apply retroactively, but only to new ownership or control changes after the entities have been designated.

Notification or approval obligations will be imposed on prospective controllers, existing controllers and designated entities, based on specific thresholds that take reference from existing sectoral legislation.

Buyers are required to notify the Minister within seven days after becoming a 5% controller. They will need to seek the Minister's approval before becoming a 12%, 25% or 50% controller. Parties are, similarly, required to seek Minister's approval if they are becoming an indirect controller or acquiring parts of the business or undertaking as a going concern. On the other hand, sellers will have to seek Minister's approval before ceasing to be a 50% or 75% controller.

Clause 16 allows the Minister the flexibility to vary such thresholds for specific entities as the situation warrants and, if so, to prescribe them in subsidiary legislation.

Under clause 19, the Minister may approve applications by parties if he is satisfied that all of the following conditions are met.

One, that the prospective acquirors or controllers and their associates are fit and proper persons.

Two, that the designated entity will be able to continue providing its critical functions if the transaction proceeds after approval is granted.

Three, that approving the transaction is not against Singapore's national security interests.

The designated entity has a duty to report changes in ownership or control specified above to the Minister within seven days of it becoming aware of the event. This provides an additional safeguard to detect any potential attempts by parties to circumvent the notification and approval requirements and ensure that the entities stay vigilant to potential threats.

Should prospective or existing controllers proceed with the transactions without seeking the necessary prior approvals from the Minister, clause 21 automatically renders such transactions void. However, materially affected parties may apply to the Minister to validate the transaction and the Minister may do so by issuing a validation notice. The Minister may also proactively issue such a notice if he is satisfied that it is in the interest of Singapore's national security to do so.

Clauses 22 to 24 allow the Minister to issue remedial directions under a variety of circumstances – for example, if conditions of approval have been breached or false or misleading information was provided in relation to an application for approval. Such remedial directions may include directing the transfer or disposal of equity interest in the designated entity or any other direction that the Minister considers appropriate.

Where a remedial direction has yet to be carried out, clause 25 has provisions to achieve the practical outcome of such a direction. Let me explain. As an example, if an initial remedial direction to divest equity interest has not been carried out, voting rights may not be exercised and no dividends may be paid in relation to the relevant equity.

The Bill also includes oversight over the appointment of key personnel of the designated entities, such as the chief executive officer, board directors and chairperson of the board. Such individuals can influence the entity's policies, decisions and actions, including over the critical functions it provides.

Under clause 27, a designated entity must obtain prior approval from the Minister to appoint key personnel. The Minister may consider any relevant factor in arriving at a decision. For example, if we receive information that a particular individual has a track record of engaging in conduct or activities that could undermine our national security interests, then this would be taken into consideration in deciding whether approval would be granted.

Clause 28 allows the Minister to require the removal of an appointed key personnel of a designated entity, if this was done without the necessary approval or if any condition of approval has been breached. The Minister can also require the removal of any key personnel, if deemed necessary in the interest of national security.

There are also provisions to ensure the continued performance of the critical functions by the designated entities.

Under clause 26, the designated entities cannot be dissolved, terminated, wound up voluntarily or be subject to judicial management without the Minister's consent. In addition, parties cannot enforce security, judgment or Court order over designated entities, unless prior advance notice has been given to the Minister. This will allow the Minister to take the necessary actions to safeguard our national security interests. If there are Court proceedings involved, the Minister will be a party to such proceedings and the Court must consider any representations made by the Minister.

Clauses 30 and 31 allow the Minister to issue Special Administration Orders – otherwise known as “step-in rights” – to direct the takeover of control of the affairs, businesses and property of a designated entity by another party. Other orders can also be issued, such as directing the designated entity to immediately take or cease any action or appointing a person to advise the designated entity in the proper conduct of its businesses or undertaking.

I would like to assure Members that such powers will only be exercised in the interest of the continued provisioning of critical functions by the designated entity or Singapore's national security interests. When exercising such powers, we will always be mindful of shareholders' interests.

The second broad set of provisions relate to powers that can be exercised against any entity that has acted against Singapore's national security interests, regardless of whether they are designated or not.

Currently, there are already existing laws to deal with egregious acts against national security. For example, under the Insolvency, Restructuring and Dissolution Act, the Court may order the winding up of a company if it is being used against Singapore's national security. However, winding up an entity could affect the continued provisioning of its functions, and may not be the desired outcome.

In the investment management legislation of most overseas jurisdictions, there are similar concepts often referred to as "call-in" powers. The relevant authorities may "call-in" certain types of transactions for review, even though they may not have triggered filing and pre-approval requirements under the regime. Such "call-in" powers are typically exercised on national interest- or national security-related grounds.

In some jurisdictions, they can be based on perceived risks without actual actions committed by the entity. The time limits of such "call-in" powers vary across jurisdictions. For example, this could range from five years in the UK to 10 years in Australia, and there is no time limit in the US.

In Singapore's case, under clause 32, the Minister can review ownership or control transactions involving any entity only if two pre-requisites are met.

First, the entity must have acted against our national security interests, and not merely pose potential threats to our national security.

Second, the ownership or control transaction must have occurred within the two years prior to the above-mentioned action by the entity against our national security interests.

The Minister for Home Affairs, as the Minister-in-charge of internal security, can issue a certificate stating that he is satisfied that the entity has acted against the national security interest of Singapore; which will be treated as conclusive evidence for the purposes of this Bill.

Following the review of the transaction, a range of directions may be issued, such as directing the transacting party to transfer or dispose of his equity interest in the entity; or directing the entity to restrict disclosure of confidential information to any person.

Let me now move on to the last segment on other general and miscellaneous provisions under the Bill.

Under clause 12, powers under the Bill can be exercised against any individual regardless of their citizenship or residency status; and any entity, regardless of the type or domicile location. As mentioned earlier, this takes into account that threats may emanate from various sources or channelled through various entities and we will need sufficient flexibility to exercise our legislative levers.

Further, under clauses 17 and 32, entities that may be classified as designated entities, or for which post-transaction powers may apply, would include those that are incorporated, formed, or established in Singapore; carry out activities in Singapore; or provide goods and services to persons in Singapore.

Clauses 47 to 50 provide a range of enforcement powers that authorised officers, Police officers and Commercial Affairs officers may exercise. All of them have powers to require any individual or entity to provide information relating to the Bill. Police officers and Commercial Affairs officers will also have powers to enter premises for investigation under the Bill.

Penalties will be differentiated depending on whether the party guilty of the offence is an individual or an entity.

Fixed monetary penalties may be insufficient deterrence for certain offences that are meant to safeguard our national security interests. This is especially so as the Bill would cover transactions across a wide range of values, as well as entities in diverse sectors and of different sizes as well as varying financial abilities.

For high-value transactions or large businesses with significant revenue, a fixed penalty quantum may neither be a sufficient deterrent nor result in a proportionate penalty in the event of non-compliance. On the other hand, for low-value transactions or small-sized businesses, going with the transaction value or annual turnover alone could translate to penalty amounts that run into similar issues. As such, for both individuals and entities, the maximum applicable penalty will be based on the higher of an absolute quantum cap or the transaction value, where applicable. If there is no transaction value, for entities, the maximum penalty will be based on the higher of an absolute quantum cap or 10% of the annual turnover. For individuals, imprisonment is also a possible penalty.

While the penalties themselves are significant, they need to be an effective deterrent as we are dealing here with actions that may impact national security.

Clauses 38 and 39 set out processes for parties that wish to seek reconsideration from the Minister for his decisions and to make further appeals to an independent Reviewing Tribunal.

Clauses 40 to 45 provide details of the Reviewing Tribunal, while clause 46 provides for limited judicial review only on grounds of failure to comply with any procedural requirement of the Act, or the regulations or rules made under the Act.

These processes are modelled after similar provisions in other legislation here that deal with Singapore's national security interests, such as the Foreign Interference (Countermeasures) Act.

Under the Ministry of Trade and Industry (MTI), we will set up the Office of Significant Investments Review. The Office will serve as a dedicated one-stop touchpoint to engage affected stakeholders and provide them with guidance and clarifications. It will also coordinate and oversee the implementation of the Act.

In closing, I would like to take this opportunity to thank various industry representatives, such as those from the law firms, financial institutions, accountancy firms and general business community, which we have consulted and which have provided valuable input in helping us refine the Bill and take into account potential impact on businesses and investors.

As described, the Bill intends to provide Singapore with an updated toolkit to manage threats posed by significant investments into critical entities. I would like to reiterate that the provisions under the Bill have been intentionally calibrated to protect Singapore's national security interests, while minimising impact on affected stakeholders so that our corporate landscape remains vibrant and attractive to bona-fide investors.

Singapore has always strived to be a responsible partner on the global stage. Our actions are based on clear and consistent principles. We will work closely with the industry and affected stakeholders and implement this Bill in a calibrated and balanced manner. This approach will allow Singapore to remain a trusted and reliable business hub, where investors can continue to invest and operate with confidence and create more opportunities for Singapore and Singaporeans. Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Liang Eng Hwa.

1.23 pm

Mr Liang Eng Hwa (Bukit Panjang): Mr Speaker, Sir, many of our critical economic capabilities are owned and controlled by commercial entities. They are managed on commercial basis with the aim to attain profitability and other economic interests. Such entities are also critical to the proper functioning of our economy and society.

We cannot rule out the possibility that, as the business owners or operators advance their strategic or economic interest, there could be potential situations where these entities may act in way that is detrimental to our national interest.

Hence, I see the need for the Government to be empowered with the necessary legislative and executive levers to not only safeguard our national security, but also ensure resilience of our economy and society.

Many other jurisdictions already have such dedicated regulations to monitor and manage such strategic entities. With rising geopolitical tensions and concerns over national economic security and strategic competition, we have seen more countries introduce new legislations to protect strategically important technologies, assets and key infrastructures, such as the CHIPS and Science Act in the US and the Export Control Law in China.

When I first heard of this Bill, my immediate response was that I thought we already have these ownerships and control safeguards to manage key sectors, such as in telecommunications, banking, utilities and media, through very extensive legislation and regulations. However, upon more detailed reading of the Bill and how the framework of review is designed, I am fully supportive of this targeted approach to review these specifically earmarked critical entities.

The new legislation targets and imposes on individual entities, rather than on the whole sector or sets of activity. As there are already existing sectoral legislations to regulate the broader critical and strategic sectors, this Bill will only impact a handful of entities that are of significant strategic and security implications. As the Minister said, those who are covered under the Bill would have been informed. Those who are not, I suppose they can feel more assured now. Furthermore, the designated entities will be published in the Gazette.

Sir, today, we live in an increasingly complex operating environment. The security threats that we face could come from various sources and in various forms, including through the ownership and control of the critical entities. Hence, the provisions in this Bill would apply to entities that are both locally- or foreign-owned.

The objective this Bill is to ensure that the critical entities continue providing their functions securely and reliably over time. Therefore, beyond imposing obligations tied to specific transactions relating to significant investments, the Bill also contains other important provisions, such as requiring approvals for the appointment of key personnels to the designated entity.

Notwithstanding my support, I have a few clarifications to seek from the Minister.

Firstly, under the Bill, only a handful of critical entities are designated as significant investments, while other potential critical entities may also not adequately be covered by existing sectoral legislation. So, my question to the Minister is, whether entities, especially those in new or emerging sectors, like artificial intelligence (AI); or those providing services in certain sectors, such as data centres, will be designated under the Bill?

Secondly, while Special Administration Orders as well as other orders, to ensure the security and reliability of the designated entities' functions, will only be exercised when it is necessary, can I also ask the Minister if there are safeguards to ensure the judicious and appropriate use of such powers?

Thirdly, with regard to the two-year time bar for entities that have acted against our national security interest, can I ask the Minister on the consideration behind this parameter of two years?

Sir, I understand that the Ministry has also considered provisions from the investment management legislation of other jurisdictions. As the Minister has said, the Bill was also developed in consultation with various industry representatives from the legal, finance and accounting sectors, as well the general business community, with particular attention paid to minimising the potential impact on businesses and investors.

So, overall, I find the Bill suitably balanced between maintaining an open investment environment while still fulfilling the intent to have adequate and effective safeguards for Singapore's national security needs. As such, I support the Bill.

Mr Speaker: Mr Louis Chua.

1.29 pm

Mr Chua Kheng Wee Louis (Sengkang): Mr Speaker, in its press release on 3 November 2023, MTI shared that the Significant Investments Review Bill, or SIRA as it will be known, is to ensure the continuity of critical entities.

Under the new investment management regime, entities that are critical to Singapore's national security interests will be identified as "designated entities" and will be regulated, and these include entities which are not currently covered under existing legislation to monitor and manage entities in sectors, such as telecommunications, banking and utilities.

In recent years, the issue of national security has risen in prominence, alongside greater uncertainty and volatility in the world today. To that end, I agree with the importance of safeguarding critical entities and infrastructure in Singapore and in taking preventive and corrective actions to keep our country safe and secure from state versus non-state actors, conventional versus non-conventional threats alike.

Many countries similarly recognise this point and have moved towards enacting or strengthening similar laws in recent years.

While we have learnt in Economics 101 that globalisation and free trade drives significant gains for both trading partners, I believe that there could be other important policy objectives that the Government must deliver for its people, such as minimising income and wealth inequality and ensuring that the gains of economic growth accrue broadly, ensuring our supply chains are resilient as evidenced by COVID-19, to name a few.

While global trade continues to grow, trade-offs to international trade are now seen by an increasing number of economies as almost inevitable, in favour of stability and national security. Findings from a September 2023 World Trade Organization (WTO) report, for example, suggest that trade is gradually becoming re-oriented along geopolitical lines.

But we can also see for ourselves the trade tensions between the two largest economies of the world and how they have cascading effects on the investment environment globally, and how corporate merger and acquisition (M&A) transactions have been blocked in the interests of national security.

Let me first share some of my observations about the business and regulatory environment here in Singapore.

The Economic Development Board (EDB) sums it up pretty well, in that "The Singapore Government is committed to creating a pro-business environment through its economic and manpower policies". This has also been affirmed in the Economist Intelligence Unit's (EIU's) latest business environment rankings, with Singapore retaining its position as the world's best business environment for 15 consecutive years.

Yet despite our pro-business environment and open economy with the ease of movement of goods, services, labour and capital, in speaking to international investors over the years, a number have shared with me their wonder as to how the Government continues to be able to exercise control over businesses and workers alike. In the case of workers, the rules imposed on trade union administration and leadership, or in Prime Minister’s words, a "symbiotic relationship between the People's Action Party (PAP) and the National Trades Union Congress (NTUC)". And in the case of businesses, explicit control mechanisms and arguably influence over companies, even though they may not be state-owned enterprises per se.

For example, Singapore Airlines has one non-tradeable special share issued to the Ministry of Finance (MOF) and no resolution may be passed on certain undisclosed matters without prior written approval of the MOF. For SingPost, the appointment of the Chairman, Directors and Group CEO requires the prior written approval of the Infocomm Media Development Authority (IMDA), in addition to other Postal Services Act obligations. Singapore Press Holdings, when it was listed then, had a small handful of shareholders holding management shares; and though these represent only 1% of total issued shares, had 68% of the total votes when it comes to any resolution relating to the appointment or dismissal of a director or any member of staff.

These are just some examples of listed companies with publicly available disclosures detailing such mechanisms, but there could well be more of such mechanisms for other public or private companies in Singapore that we may not know of. Would these companies and the specifics of their control provisions be subsequently encompassed under SIRA and would the Minister be able to confirm if such details will be made public in the interest of transparency?

In the November 2023 press release by MTI, Minister Gan shared that, "we expect only a handful of critical entities to be designated under this Bill". However, it is unclear whether the list of designated entities will eventually be disclosed. While I can understand if the Government does not wish to disclose the identities of non-designated entities but which it is otherwise monitoring for national security concerns, making public the list of designated entities will signal to businesses that the vast majority of the market is open for investment and that the scope of SIRA is truly limited to just a handful of companies.

To be clear, I am not saying that SIRA is unnecessary because of existing control mechanisms, but on the contrary, I believe that the formalisation of SIRA will allow international businesses to have greater confidence in the regulatory environment in which investments into Singapore are made, with the scoping of provisions under SIRA providing greater regulatory certainty to businesses.

Moving to my next point, as I have shared earlier, many countries globally have moved towards enacting similar laws and it may be instructive to draw comparisons with the US Committee on Foreign Investment in the US (CFIUS) and the UK's National Security and Investment (NSI) Act.

Firstly, I note that CFIUS publicly issues an annual report to Congress, covering key indicators of its activities and process, including the complexity and volume of cases before the committee. This is as set out in statute at section 721(m) of the Defense Production Act of 1950.

Similarly, section 61 of the NSI Act requires an annual report to be published, with minimum statutory requirements relating to the details of its functions.

Would the Minister confirm if there will be subsidiary legislation governing the categories of information relating to SIRA that have to be disclosed, to better aid understanding and transparency?

Secondly, CFIUS authorises the US government's review in transactions of a certain nature between a US business and a foreign party, and these transactions could be (a) control transactions, (b) investments and (c) real estate transactions. On covered non-controlling investment transactions, these would mean a foreign party investing in a US business involved in critical technology, critical infrastructure and/or sensitive personal data, and the foreign party acquiring at least one of the listed rights.

Further, the Executive Order 14083 specifically identified sectors fundamental to US technological leadership, including but not limited to microelectronics; AI; biotechnology and biomanufacturing; quantum computing; advanced clean energy; climate adaptation technologies; and elements of the agricultural industrial base, that have implications for food security.

The UK NSI has similarly defined the list of 17 sectors of the economy for which prior approval is required for acquisitions that could harm the UK's national security.

In addition to the telecommunications, banking and utilities sectors, in which there are existing sectoral legislation, will the Minister make known the sectors in which SIRA will apply, to provide for greater regulatory transparency to investors and businesses? Further, given the speed of technological advancements, how often would this sectoral coverage and consequently, the list of designated entities be reviewed and updated?

Thirdly, on notification thresholds, CFIUS requires the authorities to be notified if a foreign party obtains 25% or more voting interest in critical technologies, critical infrastructure and sensitive personal data (TID) businesses; and a foreign government, except for Australia, Canada, and the UK, holds a 49% or more voting interest in the foreign party.

The UK NSI Act would apply for acquisitions of control over qualifying entities or assets where there could be a potential risk to national security, with control defined as: (a) an entity acquiring or increasing its interest to at least 25% or such that it crosses the 50% or 75% thresholds; (b) an entity acquiring voting rights in qualifying entity such that the acquirer could secure or prevent the passage of any class of resolutions; (c) an entity obtaining “material influence” over a qualifying entity.

What is the rationale for the designation of 5% as the threshold in which acquirers of designated entities must notify the Minister? I recognise that this is like that of the substantial shareholder notification requirements for listed companies on the Singapore Exchange, but beyond changes in ownership, does the current legislation sufficiently provide for situations where control may be effectively transferred, without necessarily changes in ownership, such as via different classes of shares or specific resolutions that are passed by the company?

Moreover, does SIRA also sufficiently cover any technological transfers or core intellectual property rights that may potentially jeopardise our national security, even without ownership changes? What are the preventive or corrective measures that are available under SIRA to protect these on the grounds of national security?

Finally, I move on to Bill-specific clarifications.

The first thing I observed is that, even though the primary purpose of this Bill is to safeguard Singapore's national security interests, the phrase "national security interests" does not appear to be defined anywhere in the Bill. How then, does the Government satisfy itself that an entity has acted against the national security interests of Singapore? A law professor was quoted in The Business Times that such an omission is deliberate, and I quote, “to enable the authorities to adopt a broad and generous reading” of the term. Does the Minister agree with such a view, that such a broad interpretative freedom by the Government was deliberate; and if so, why?

Second, clause 27 empowers the Minister to decide on the appointment of key officers of designated entities, such as the chief executive officer, directors and chairpersons, and similarly, clause 28 empowers the Minister the remove such key officers. What are the objective and subjective criteria that the Government will put in place in exercising its powers over the key officers of designated entities?

Clause 27(3) references criteria that the Minister may specify; and 27(4) references conditions that the Minister may prescribe for the approval of key officers. What are some examples of and the nature of such criteria and conditions?

Finally, clause 46 on limited judicial review, where every determination, order and other decision of a Reviewing Tribunal or any Minister made or purportedly made under this Act is final and is not to be challenged, appealed against, reviewed, quashed or called in question in any court, except in regard to compliance with procedural requirements or the rules and regulations governing that determination, order and other decision.

We have had a long discussion on the role of judicial review ouster clauses in our legislation, during the debates on the then-Foreign Interference (Countermeasures) Bill, or FICA.

SIRA is similar to FICA, in that there is limited judicial review and in which the reviewing tribunal is also comprised of three individuals appointed by the President on the advice of the Cabinet. The Workers' Party believes in the important oversight mechanism played by the role of the courts and as my hon friend Ms He Ting Ru shared in 2021, such a clause offends Article 93 of the Constitution, which expressly states that "judicial power of Singapore shall be vested in a Supreme Court and in such subordinate courts as may be provided by any written law for the time being in force".

While FICA deals with counteracting acts of foreign interference and specifically aimed at politically significant persons, where the evidence rely heavily on sensitive intelligence and collaboration with foreign counterparts; SIRA deals with investment decisions made by businesses where, yes, there can be the possibility of insidious parties masquerading as legitimate businesses, but where I would imagine the threat to our national security interests depend more on the nature of the industry sector, that type of goods and services provided to Singaporeans and the business activities that are carried out here. What is the rationale for disallowing the role of the courts, particularly when our reputation as an international business hub relies heavily on upholding the rule of law itself?

To conclude, Mr Speaker, I recognise the importance of safeguarding critical entities and infrastructure in Singapore and in taking preventive and corrective actions to protect our national security interests. It is also as important that we ensure the implementation of the Act and the exercise of powers conferred are done in a justifiable and transparent manner, with decisions made publicly accounted for on a regular basis, such as in other jurisdictions, where practicable. And it is also as important that we continue to uphold and defend the sanctity of the rule of law in Singapore, in which our reputation depends so heavily on. Notwithstanding my clarifications, I support the Bill.

Mr Speaker: Mr Shawn Huang.

1.42 pm

Mr Shawn Huang Wei Zhong (Jurong): Mr Speaker, in an era where economic landscapes are rapidly evolving, there is a need for robust measures to safeguard our national interests. In a world where some economic activities are intrinsically linked to national security, the importance of this Bill transcends mere financial implications. It is about preserving our sovereignty, protecting our critical infrastructure and ensuring that our nation remains relevant and viable. I have a few questions for the Minister.

Can the Minister clarify, how the Bill will balance national security and economic interest without adversely impacting Singapore's competitive business environment? How does this Bill comply with Singapore's existing trade obligations? How will this affect future trade negotiations?

What are the mitigating measures to ensure this Bill does not deter foreign investors and maintains Singapore's reputation as a global investment hub? How will this affect entities considering investments in infrastructure, technologies or capabilities in Singapore that may be included as significant investments in the future?

Would the Minister provide a more comprehensive definition of what constitutes as "significant investments" under this Bill? What criteria will the Minister use to designate entities as critical for national security? How will this process be safeguarded to ensure accountability?

How will this Bill affect entities whose operations depend on specific proprietary technologies and intellectual property whose rights and use may not reside within this entity, and if the network of capabilities or infrastructure is multi-national and cross-border? Mr Speaker, notwithstanding the above clarifications, I support the Bill.

Mr Speaker: Mr Leong Mun Wai.

1.44 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, the Significant Investments Review Bill seeks to protect Singapore's security interests by regulating significant investments in and control of critical entities.

Under the proposed Bill, a screening regime for ownership transactions in critical business entities will be set up. This is similar to the screening regimes in other countries, such as the UK and Ireland.

The Progress Singapore Party (PSP) agrees that we can enhance our national security, by ensuring that key entities in critical business sectors always remain under some level of domestic control. These sectors would include defence, military supplies, telecommunications, transport and banking. We do not oppose setting up a screening regime for ownership transactions in such sensitive sectors of the economy.

However, the powers granted to the Minister to designate entities as critical entities under section 17 of the proposed Bill are very broad, as any entity can be designated as such. We are particularly concerned about the following provisions.

Firstly, in the interest of transparency, will the Government spell out the sensitive economic areas where entities are likely to be designated as critical entities under the proposed Bill? Will these sensitive economic areas extend to areas which are not considered sensitive in other jurisdictions, such as the media? The NSI Act in the UK, for example, has subsidiary legislation that designates 17 sensitive areas of the economy, such as AI, defence and transport, where acquisitions must be subject to government review.

While the proposed Bill currently provides for the designation of these entities to be publicly announced in the Gazette, it would be better for these economic areas and entities to be designated under a Schedule to the proposed Bill so that Parliament has greater oversight over the designation of these critical entities. Today, Parliament is asked to support the Bill without knowing which are the economic areas and companies that are likely to be affected.

Secondly, under section 27 of the proposed Bill, critical entities will be required to seek approval for the appointment of key officers. Section 28 of the proposed Bill also allows the Minister to remove key officers in the interest of national security.

PSP is very concerned about such provisions, which are very broad and could potentially be used by the Government to interfere with the business decisions of private companies or as a tool for retaliation. It is, theoretically, possible for the Government to use these powers under section 28 to remove the CEO or director of a critical entity, who has joined an opposition party, in the name of national security interest.

Thirdly, PSP is concerned by the broad powers of a Police officer to enter premises without a warrant under section 49 of the proposed Bill. Can the Government explain why these broad powers are necessary under the proposed Bill, in addition to (a) the power to obtain information by written notice under section 48, of which non-compliance constitutes a criminal offence; and (b) the power of entry with a warrant under section 50?

Fourthly, while the decisions by a Minister would still be appealable to an independent Reviewing Tribunal, section 46 of the proposed Bill is a judicial review ouster clause, which provides that the Tribunal's decision is final and cannot be challenged, appealed against, reviewed, quashed or called into action in any other Court of law.

Judicial review is only allowed under extremely narrow grounds to ensure that the procedures under the Bill, regulations or rules have been complied with. It is also noteworthy that these regulations and rules are made by the Minister himself; and by the Tribunal itself, pursuant to sections 45 and 44(3) of the proposed Bill.

It is very troubling to us that, yet another law is being passed where there is limited provision for judicial review on the grounds of national security. This ouster clause is very similar to the ouster clauses under the Internal Security Act and FICA. It breaches the principle of the separation of powers by limiting the checking powers of a co-equal judiciary upholding the rule of law. It is noteworthy that even in the UK where Parliament is supreme, the National Security and Investment Act 2021 provides for judicial review beyond complaints of procedural improprieties.

Without amendments to the provisions discussed above, PSP opposes this Bill. PSP believes that while it is fundamentally in the interest of our national interest to ensure that key entities in critical business entities and business sectors remain under some level of domestic control and can maintain business continuity under all circumstances. We can do this without having such sweeping legal powers on the books.

Recently, we have witnessed several banking and e-payment outages at banks, such as DBS and OCBC, which would be prime candidates to be designated as critical entities under the proposed Bill. These banks are already under domestic control and their operations are subject to regulations by the Monetary Authority of Singapore. These outages demonstrated that it is not enough to just have oversight over the ownership and management of such entities, if we are really serious about ensuring national security.

There must be a whole-of-country approach towards ensuring the resilience of such critical entities. For example, there must be a talent pipeline made up of a strong Singaporean Core that is able to operate, manage and maintain key systems, such as data centres and other IT infrastructure, within critical entities. We also cannot rely excessively on outsourcing these key systems to other foreign countries to save costs. Some of these infrastructure and systems must always be maintained in Singapore.

Finally, we must have a robust regulatory framework that enforces stiff penalties, commensurate with the scale of the failure when these critical entities fall short of delivering essential services to the public. It is in our national interest to ensure that critical entities provide these essential services with minimal and infrequent disruptions in services to the public, even in the absence of extreme situations, such as a war, pandemic or extreme weather caused by climate change.

Mr Speaker, PSP believes that we do not need such sweeping legal powers under the proposed Bill to control our significant and critical entities. Rather, we should focus on the resilience of such entities where the Singaporean Core is no longer overseeing and manning them. PSP does not support this Bill in its current form. Singaporeans deserve better. For country, for people.

Mr Speaker: Mr Raj Joshua Thomas.

1.54 pm

Mr Raj Joshua Thomas (Nominated Member): Sir, I rise to support the Bill moved by the hon Minister for Trade and Industry.

The Bill follows on the tails of an international wave of jurisdictions introducing or tightening laws with similar intents over the past few years. Over 50 jurisdictions have done so. I think the Minister mentioned at least 23 countries, but my research seems to suggest that there are over 50 jurisdictions that have done so. The UK Parliament enacted the NSI Act in 2021, which entered into force in 2022.

In Germany, the government made amendments to the Ordinance on the Designation of Critical Infrastructures, which came into effect in 2022, that significantly expanded the scope of entities that qualify as operators of critical infrastructure and lowered the investment thresholds in certain critical infrastructure sectors, for example, IT, telecommunications and energy. There are also similar laws in the US and in Australia.

I have two clarifications on the Bill.

My first clarification is on definitions and the consistency of definitions across statutes. The term "national security interest" is used extensively in the Bill but is not defined in the Bill; and the term "national security interest", in that order – "national", "security", "interest" – also appears to be quite unique to this Bill.

The Personal Data Protection Act, or PDPA, has a definition of "national interest". It is defined as including "national defence, national security, public security, the maintenance of essential services and the conduct of international affairs". So, national security is included in that Act in the definition of "national interest".

However, I separately note that pursuant to the introduction of FICA, we amended, inter alia, the Societies Act to change the mention of "national interest" to "national security and interest". It, therefore, follows or suggests that "national security", "national interest" and potentially "national security interest" may actually refer to different things.

I note that in then-Minister for Communications and Information Dr Yaacob Ibrahim's speech on the Films (Amendment) Bill in 2018, the Minister provided another relevant definition, that is, the definition of "considerations of national security". He defined it as including what would be "detrimental to the continued existence of the country, its ability to exercise its sovereign rights and the safety and security of citizens and their way of life".

While it may appear pedantic, it is important for us to have consistency of definitions across statutes, especially when the use of a particular term or particular similar terms confer wide-ranging powers to the respective Minister as it does in this Bill. It is also important to clarify what exactly the term means to give guidance to the Office of Significant Investments Review, which will be set up after the enactment of the Bill, on what exactly are the activities they should be looking out for, particularly as regards non-designated entities that have acted against Singapore's national interests, pursuant to clause 32 of the Bill. It would also help to identify what activities or transactions entities should avoid so that they are not inadvertently caught by the provisions of the Bill.

In this regard, I would like to seek clarification from the Minister as to the definition of "national security interest" in the Bill; and specifically, whether it would be aligned with the definition of "considerations of national interest" as elaborated by Minister Yaacob Ibrahim in the context of the Films (Amendment) Bill, which I mentioned earlier, or otherwise.

Again, I would like to emphasise that consistency in the use of terms across statutes is important and that these definitions should be clarified at the earliest opportunity to avoid ambiguity and uncertainty.

In fact, the point made by the hon Non-Constituency Member of Parliament Mr Leong just in his speech before mine is interesting, where he asked whether a CEO who joined an opposition party, whether such a situation would be considered as contrary to national security. So, if we can define what the term is properly and clearly, then we can avoid such concerns or such assertions being made, which may mislead the public as to the intentions and the results of the application of the Bill.

My second question is with regard to the possibility of listed companies being designated as designated entities, in particular, defence-related Singapore-listed companies. I note that the list of designated companies will be published after the enactment of the Bill. First, I expect that the mere fact that a company is a listed company would not deter the Government from designating it as a designated entity if necessary. In such an event, how will the Government ameliorate any adverse effect on the share price of such companies if they are announced to be on the list of designated entities, so as to avoid undue effects on investors, in particular, retail investors, in these companies?

The above having been said, this Bill is an important chink in our armour against undue influence that may be used against Singapore's interests and will complement existing legislation to protect Singapore's national security and economy. Notwithstanding my clarifications, I support the Bill.

Mr Speaker: Mr Don Wee.

2.00 pm

Mr Don Wee (Chua Chu Kang): Mr Speaker, Sir, I rise in support of the Bill.

The COVID-19 pandemic has shown how important it is that we have control over critical entities, supply sources and logistic chains. Given how dependent we are on imports and considering the diversity of countries which supply goods and services to Singapore, we must ensure that significant investments are from reliable and friendly allies to mitigate our risks.

Similar legislation had been passed in many countries in recent years, including a few Organisation for Economic Co-operation and Development (OECD) countries and China. More nations are expected to follow, as governments scrutinise inward foreign direct investments (FDIs) ever more rigorously to enhance economic resilience and national security. Mr Speaker, Sir, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] The proposed Bill is intended to complement the existing legislation that already targets individual business sectors, while the current legislation already imposes restrictions on institutions in sectors, such as telecommunications, banking and utilities. The new Bill could plug the policy loopholes created by today's international strategic investment environment.

However, since these institutions have not been identified, would the Minister be able to share more clearly the criteria for the selection or exclusion of these candidates and the components which buyers and sellers need to pay attention to? Will the Minister provide more information and examples of the circumstances under which our national security and strategic interests are threatened? Do these instances include private healthcare facilities with medical records of our government leaders and industry heads? May I know what impact does this type of regulation have on businesses in specific sectors from the time they were implemented till now?

This new Bill should draw upon experiences from the past and most importantly, not cause foreign investors to lose confidence in Singapore, which impact employment opportunities for our people.

(In English): Another question I have is regarding the complex structures of many investment companies. More likely than not, most have many owners and the intertwined relationships can be multi-layered and multinational. How would the Government assess these complicated fund sources and identify the ultimate beneficiary owners? In the event remedial direction may be issued to transfer or dispose equity interests held in the designated entities or to change a key office-bearer, how does the Minister decide on the timeframe? A lot of malicious corporate actions can be performed during a short duration.

As with any new process, there are possibilities of unintended consequences. While I am glad to note that the Bill was crafted in consultation with industry representatives to take into account the potential impact on businesses and investors, I am concerned about the potential dampening impact on our FDI. As a country, which has traditionally courted investments, how would the Government project our continued welcome of legitimate investments and build upon our reputation as an attractive investment destination?

Mr Speaker: Mr Neil Parekh.

2.03 pm

Mr Neil Parekh Nimil Rajnikant (Nominated Member): Mr Speaker, Sir, thank you for allowing me to join this debate. Before us today is the Significant Investments Review Bill.

Keeping in context the current geopolitical environment, many similar open economies in the world have introduced measures to subject investments in strategically important companies to greater scrutiny. For example, as of April 2023, 24 out of the 27 member states of the European Union have already introduced or are in the process of introducing similar measures. There is a concern that investments in strategic companies may be motivated not just by commercial interests, but also by geopolitical objectives. These concerns are most pronounced where the acquiring firms are state-owned or controlled by a state.

Moreover, considering Singapore's status as a significant global financial hub that embraces international investors, conducting such a review at this time is highly opportune. Clarity and consistency of policy is what sophisticated investors around the world look for. Striking a balance between ensuring national security and maintaining a business-friendly environment is crucial for enhancing Singapore's competitiveness in the global arena.

I would like to take this opportunity to seek some clarifications from the hon Minister.

The Bill empowers the Minister to take various actions, including designating entities, issuing remedial actions and conducting reviews of transactions. The potential for such an intervention may result in delays in the approval of forthcoming legitimate investments. Could the Minister please elaborate on the scenarios that may warrant some of these remedial actions? Has a maximum timeline been provided for issuing remedial decisions and conducting reviews of transactions? Also, has a timeline been established for the regular review of the list of designated entities?

Another point where I would like to seek a clarification on, is what may constitute national security interests? While I fully appreciate it may be impossible to list every possible interest, I ask for this clarification as, in many other jurisdictions, the ambiguity surrounding this definition has led to significant losses for investors.

In the current geopolitical environment, the biggest national threat for Singapore is the economic threat. As has been mentioned, this new legislation will be in addition to the existing sectoral legislation in regulated sectors, such as telecommunications, banking and utilities. I would like to seek clarification on how inconsistencies in regulation of entities with a similar economic risk profile across sectors will be avoided. Would we not have been better served by having one clear, consistent and comprehensive Bill that covers all relevant sectors and entities? From a business investor's point of view, having one single comprehensive process would provide the enhanced clarity and consistency that is desired.

In this regard, I would like to seek a clarification on whether a more comprehensive approach to regulating foreign investments in entities significant to Singaporeans' daily lives is being considered. For example, in Australia, the Foreign Acquisitions and Takeovers Act 1975 applies to all foreign investments in that country. Having a similar act would help maintain all critical entities that play a key role in the daily life of all Singaporeans to remain in control of Singaporeans rather than fall prey in the hands of foreign investors who, perhaps, may be more focused on short-term profits rather than optimising quality products and services for Singaporeans over the long-term.

To maintain the transparency, consistency and clarity that investors desire, perhaps a high-dollar limit for a minimum transaction value of S$400 million be established for such foreign investments to be included in this process. Establishing such a higher minimum transaction value could perhaps help maintain efficiency without compromising regulatory oversight and continue to make Singapore an attractive destination for foreign investment. In my view, in the current geopolitical environment, such a broader proposal for a more comprehensive Bill would be understood and readily accepted by foreign investors.

Also, many large institutional investors cannot invest in designated entities unless there is a clear mechanism for those designated entities to potentially regain their undesignated status. Can the Minister perhaps share information on the process that is being established for such designated entities to be undesignated in the future?

In summary, aiming to enhance the resilience of the economy and strengthen Singapore's position as a trusted hub for businesses to invest with confidence, in my view, the introduction of SIRB at this time is opportune and excellent for Singapore.

This Bill provides the necessary flexibility to the Minister to act swiftly and decisively when needed. The establishment of the Office of Significant Investments Review also provides a very useful dedicated one-stop touchpoint for all stakeholders.

Mr Speaker, Sir, notwithstanding my request for some clarifications, I believe this Bill is a very good balanced first step for us to manage the unique risks emerging from allowing meaningful investments in our critical entities in Singapore. I stand in support of the Bill.

Mr Speaker: Assoc Prof Razwana Begum.

2.10 pm

Assoc Prof Razwana Begum Abdul Rahim (Nominated Member): Mr Speaker, I stand in support of the Significant Investments Review Bill.

This Bill sets out a framework to regulate significant investments, whether originating locally or internationally, in entities deemed crucial to the national security interests of Singapore. This is an important, timely and strategic Bill. The Bill develops an investment management regime that balances Singapore's economic prosperity and capacity to attract investors with proportional oversight mechanisms to protect and safeguard Singapore's national security interests.

As explained by Minister Gan earlier, this Bill aims to adopt a calibrated approach, balancing both investment and national security interests.

Mr Speaker, part of Singapore's success can be attributed to our capacity to attract foreign investments and our focus on innovation. Singapore is a small nation with no natural resources to trade with the world. Yet, we have developed a robust economy and established a strong reputation in global markets. We have created a safe and secure environment for our people with living standards that are among the highest in the world. We have come a long way over the past 60 years: from our initial industrialisation effort in the 1960s, with factories producing items, such as garments, mosquito coils and toys; to now, hosting regional headquarters for some of the world's largest and most innovative companies, such as Novartis, Microsoft and Apple.

Mr Speaker, investment is critical to Singapore's economy and this Bill provides a framework to assess and mitigate potential risks associated with investments that could compromise national security. Issues of national security are multifaceted and constantly evolving in an interconnected world where capital flows transcend borders. The impact of large investments on nationals' well-being cannot be understated. Certain industries are critical to Singapore's infrastructure and our safety and security must be shielded from potential threats posed by foreign and domestic entities.

Legislative control is necessary to prevent large-scale disruptions to critical entities caused by speculative investments or hostile takeovers, without compromising Singapore's attractiveness to foreign investors. With that understanding and while I acknowledge the potential benefits of this Bill, I do have some clarifications and suggestions.

Mr Speaker, as a head of the Public Safety and Security Programme at the Singapore University of Social Sciences, I have a personal and professional interest in the area of public safety and security. My concerns are largely based on my research and development of courses related to this topic. My clarifications are divided into two areas.

First, national security risk assessment. Mr Speaker, as raised by other hon Members of this Parliament earlier, despite the concept of national security interests being fundamental to this Bill, the Bill does not include an explanation or definition of the term.

Prof Arnold Wolfers from Yale University famously defined national security as an ambiguous symbol. According to Prof Wolfers, "National security concerns the protection or preservation of cherished values against threat or damage and traditionally. For the State, these values are sovereignty and prosperity". Prof Wolfers goes on to say that, "In an objective sense, national security measures the absence of threats to acquired values; in a subjective sense, it measures the absence of fear that such values will be attacked."

Given the inherent vagueness surrounding the terms "national security" and "national security interests" and the ever-changing nature of national security, it may not be feasible to include a workable definition of those terms in the Bill. However, I would like to echo the points made by my fellow Nominated Member of Parliament, Mr Raj Thomas, on the need to differentiate the terms and be clear.

Additionally, what is a national security issue one day, may not be so the next; and we also never know what is around the corner regarding new and emerging national security threats.

Mr Speaker, in Singapore, our national security strategy aims to enhance coordination among the different Ministries and national security agencies. We have the National Security Coordination Secretariat that provides planning and coordination and each Ministry also has its own system for assessing risk to national security.

In light of the above, will the Ministry consider developing an evidence-based robust and flexible risk assessment tool that can be used across all Ministries to identify what is and what is not an issue of national security? In doing so, the tool could also be used to assess or categorise investments based on their potential impact on national security as well as monitor which sectors may pose a greater security risk at any one time.

As well as being of assistance across the Government, the risk assessment tool could also form the basis of guidelines to educate and support potential investors with investment applications. The guidelines would also promote responsible investments, increase investors' confidence in expanding into sensitive industries and maintain the image of Singapore as being efficient and pro-business.

Similar guidelines are currently in use in Australia, where they have established publicly available sectoral guidance. They have also implemented national interests and national security tests as part of their investment screening policy.

Second, the Office of Significant Investments Review. Mr Speaker, I note that an Office of Significant Investments Review is to be established within MTI and it is supposed to be a dedicated one-stop touchpoint for stakeholders. I support the establishment of such an office and ask the Minister whether the office is to be established under the current Bill with its roles and function defined by legislation. Being legislatively based would clarify and formalise the roles and function of the office and would provide the office with ongoing certainty and stability.

Mr Speaker, in defining the roles and function of the Office of Significant Investments Review, it is important that the office is seen by both local and foreign investors as accessible and business-friendly and a place where they can go for information, advice and support. It would not be helpful if investors, either current or future, felt that the only function of the office was to oversee, investigate and issue remedial opinionative directions.

I am pleased to note that this Bill provides information on the administration, reconsideration, appeals and judicial review as well as enforcement. It is important for any remedial opinionative direction made to be transparent. By doing so, I believe we can create a safe environment, promoting responsible investments and voluntary compliance.

To conclude, this Bill is a positive step forward in ensuring Singapore remains a resilient and secured nation. When developing this management review framework, we must strike a balance between considering global economic condition, geopolitical tensions, defer competition for investments and investors' aspirations.

On that note. I would like to share the remarks made by Deputy Prime Minister Lawrence Wong at the annual May Day Rally last year. On that occasion, he noted, "We must always have that something special that convinces the world that we are better bad than most and that Singapore can always be relied upon to deliver."

Mr Speaker, clarifications notwithstanding, I support the Bill.

Mr Speaker: Mr Louis Ng.

2.17 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill will create an oversight framework for entities critical to our national security interests. I have three points of clarification.

My first set of clarifications, is on the notification and approval regime for notification and approval regime for controllers of designated entities.

Under section 16, a person's shareholdings are combined with their associates' shareholdings to determine if notice or approval requirements are triggered. The definition of associate, under section 15, is very wide. It can include even a person's employers, employees and colleagues. Can the Minister share how the monitoring of the shareholding of associates may be carried out in practice by individuals?

If there is any contravention of notices or approval requirements, the burden is on the accused to prove that they were not aware of the contravention. Can Minister also provide examples of what an accused will need to show to prove that they were not aware of the contravention?

My other clarification on this topic, is on a difference in the defences available for contravening certain notices requirements.

Section 18(5) requires the accused to notify the Minister within seven days of contravening a notice requirement. Section 19(12)(c) only requires the accused to take "all reasonable steps" to notify the Minister within seven days of contravening a separate notice requirement. Can the Minister clarify the rationale for making it is easier to avail to the defence in section 19?

My second clarification is on the Minister's power to issue a review notice against an entity that has acted against our national security interests. This power extends beyond designated entities, to any entity formed in or carrying business in Singapore. It also extends to any transaction where voting power is acquired. The broad powers in this part of the Bill mean that such transactions may be unwound within two years after they are concluded.

MTI has said that the Bill is designed to be business-friendly. However, these broad powers may increase costs and slow down business activity by requiring additional due diligence and monitoring of investments after a transaction has closed. Can the Minister share the findings of its consultations with businesses on the impact of these provisions and how the Government intends to mitigate the impact on businesses?

My last clarification is on the role and powers of the Reviewing Tribunal. As the scope of judicial review is limited by section 46, the Reviewing Tribunal substantively performs the function of the Supreme Court in reviewing the Minister's powers under this Bill. The proceedings of a Reviewing Tribunal are deemed to be judicial proceedings. Can the Minister confirm that the Reviewing Tribunal will apply consistent standards of judicial review as the Singapore Courts, with reference to the applicable case precedents?

Due to national security reasons also, appellants may not be provided with full information regarding the decision being appealed. Can the Minister confirm that the Reviewing Tribunal will be separately provided with all information, even information not given to the appellant, to make their decision?

Lastly, will the Reviewing Tribunal be allowed to take into account the potentially incomplete information provided to the appellant, in deciding each case?

Sir, notwithstanding these clarifications, I stand in support of the Bill.

Mr Speaker: Mr Mark Lee.

2.21 pm

Mr Mark Lee (Nominated Member): Mr Speaker, Sir, Singapore's reputation as an open, stable and business-friendly economy is a testament to our foresight and commitment to global integration.

During the COVID-19 pandemic, our decision to keep supply chains open and maintain trade links not only demonstrated our resilience but also reinforced worldwide investors' confidence. This strategic move was crucial at a time when many countries were turning inwards, underscoring Singapore's role as a reliable partner in global trade and commerce.

As we navigate new geopolitical and security complexities, it is crucial that the Significant Investments Review Bill is crafted and perceived as an extension of these values. The Bill must be seen as a proactive measure to safeguard our economic and security interests while reinforcing our commitment to being an open, transparent and reliable partner in the global economy.

As mentioned by the Minister, many countries have established various forms of investment screening, particularly in sensitive sectors, such as defence, technology, infrastructure and energy, reflecting the global trend towards safeguarding national interest. One of our nearest neighbours, Vietnam, has investment management rules for critical sectors, like rice exports and mineral mining.

Businesses appreciate that the proposed Bill strikes a reasonable balance between national security needs and business priorities. It is not an omnibus legislation and will only be applied to a handful of designated entities critical to Singapore's national security interests.

In addition, the establishment of a dedicated Office of Significant Investments Review as a one-stop touchpoint is a positive move and will help to ensure that key issues and concerns are addressed expediently.

I am glad that the Minister has made clear that the rules of this proposed Bill will not retroactively apply. This will give great comfort to ensure existing investors do not get stuck and entrepreneurs not lose value from having a narrower group of investors to prospect for fundraising or exit. The publication of the list of the designated entities will also be important to take the guesswork out of potential investors.

However, some clarifications to the Minister. Under what circumstances and how often will the designated list be updated?

Under the provisions regarding national security interest directions that the proposed Bill permits, the definition of national security needs further clarity as spoken by Nominated Member Raj Thomas.

Under section 32(3), a Minister is allowed to publish notices to review transactions within a period of two years after any transaction. After such notice, the Minister may at any time thereafter order directions under section 32(5). This means that businesses may be subjected to potential scrutiny and uncertainty for an indefinite, undefined time period even after transactions are completed. This is not ideal especially for higher-value transactions and investments.

Second, there are powers under this Bill that allow for the review of ownership of entities even if they are not designated. There are concerns that this will give the Government "soft" powers to flag and control the transactions of legitimate entities in certain sectors. It would be helpful for the Government to provide more clarity on how businesses can have certainty that they would not be penalised under this legislation and the conditions that they would have to fulfil do not fall out of line with national security provisions.

The current requirements under section 32(1), which provide that the Minister's powers can activated as long as the entity is incorporated and has business activity in Singapore, are quite broad and arguably require further clarity.

Lastly, we call for a consistently open and consultative approach from the Government, including established timelines for responses and a transparent appeals process. This will enable businesses to effectively navigate the legislation and align their operations with national security requirements.

For instance, there is currently no provision within the Act that allows for appeals against Special Administration Orders, even though such orders may potentially result in significant changes in the management of the affairs, business and property of a designated entity.

We appreciate that under section 28, designated entities and affected individuals will be given an opportunity to be heard in decisions regarding removal of key officers. It would be ideal if a similar forum could be provided for other Orders made under the proposed Bill as well.

We need to ensure that companies, investors and entrepreneurs do not perceive this proposed Bill as a protectionist move by Singapore, as such ownership rules tend to be associated with these intentions. The proposed Bill does well by clarifying the limited circumstances in which the Minister's discretion may be exercised and provides well-needed assurance that orders made outside such purposes would be against the spirit and objective of the Act under section 29(2).

In conclusion, the business community calls on the Government to maintain a consultative approach, provide clarity on pertinent issues, like national security definition; and also sought to refine processes and outcomes and ensure that the Bill does not inadvertently stifle growth and innovation. In doing so, we can continue to strengthen Singapore's position as a trusted hub for businesses and investments.

Mr Speaker, Sir, notwithstanding my clarifications raised, I support the Bill.

Mr Speaker: Mr Yip Hon Weng.

2.27 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Speaker, Sir, the Significant Investments Review Bill is a critical piece of legislation with far-reaching implications for Singapore's future trajectory.

While acknowledging the imperative of safeguarding our national security, I believe in the critical need to thoroughly consider this Bill's potential impact on our economic growth, transparency and accountability. I seek clarification in several areas.

First, Mr Speaker, Sir, I seek clarifications on how the Bill may impact foreign investment and some specific industries.

One of my primary concerns lies in the potential dampening effect this Bill may pose to foreign investment. Investors thrive on clarity and predictability. At present, the lack of specific guidelines could create an environment of uncertainty. While we understand the need for discretion, without a clear understanding of the risk assessment methodology, investors might hesitate and this might impede economic growth.

Also, will the provisions of this Bill conflict with any existing trade agreements? If so, how will this be addressed when the provisions of this Bill become law?

Second, Mr Speaker, Sir, the broad authority granted to the Government under this Bill raises legitimate questions about transparency and accountability. The vague delineation of "national security interests" necessitates clear guidelines and a robust oversight mechanism. This is to reassure stakeholders that they may be assured of equitable and judicious application of this law, thereby averting the potential abuse of authority.

Third, Mr Speaker, Sir, how does the Minister intend to strike a balance between security and economic growth? Achieving equilibrium between national security imperatives and economic prosperity is a nuanced undertaking. Compliance, like a tangled vine, can choke the life out of economic activity. We must ensure that the burden placed on designated entities is proportionate to the identified risk, lest we inadvertently stifle the very growth that we seek to protect.

Can the Government provide concrete examples of how the Bill will affect businesses in different sectors? What measures are in place to minimise compliance costs and administrative burdens?

Businesses are the heartbeat of our economy. We must treat them with the care they deserve. Overly stringent regulations risk stifling innovation and hampering our capacity to attract and retain talent, as the designated entities are required to seek approval for the appointment of key officers. This may be viewed as being intrusive. As such, this may ultimately hinder our long-term economic objectives.

Fourth, Mr Speaker, Sir, did we learn from the experiences of other countries with similar legislation, in the formulation of this Bill? I note that some countries have acknowledged the need to have adequate levers to ensure the security and reliability of their critical infrastructure, facilities, supply chains, technologies and resources.

For instance, in 2023, the UK government investigated the proposed acquisition of two UK businesses by a wholly-owned UK subsidiary of a French state-owned company. The transaction was deemed a potential risk to national security. This was because of the critical national security and defence capabilities relating to naval propulsion systems delivered through the two UK entities. While the acquisition was eventually given the go-ahead, it was subject to various conditions, such as physical and information security requirements.

This is not the only example. We must, therefore, look beyond our shores and other similar legislation implemented overseas. For instance, how do other countries define "national security interests"? What safeguards have they put in place to ensure transparency and accountability? By learning from others, we can refine our own Bill to achieve its objectives without inadvertently harming our economic engine.

Fifth, Mr Speaker, Sir, consideration should be given to the protection of minority shareholders. The Bill must, where possible, ensure the fair treatment and protection of these shareholders within designated entities. Their investments should not be prejudiced beyond what is necessary. Clear guidelines and robust dispute resolution mechanisms must be established to safeguard their interests.

Lastly, Mr Speaker, Sir, how does the Government ensure clarity and efficiency of the review process? It must be a process that is streamlined, expeditious and without unnecessary delays or administrative burdens. Investors deserve a transparent and timely decision-making process, one that fosters trust and encourages continued engagement with our economy.

Can the Government elaborate on the safeguards against potential misuse of Ministerial powers? Will there be independent review mechanisms in place for Ministerial decisions? Also, can the Government assure us that the Tribunal will be equipped with the necessary expertise to handle complex national security considerations? Will its decisions be binding on the Minister?

Further, will the Government publish or share the findings and the basis of such reviews? Doing so will likely instil confidence in investors, so that they may trust that such a process is transparent and fair.

We need to ensure that there is sufficient manpower and resources to facilitate this. I note that the Minister earlier mentioned that an Office of Significant Investments Review will be set up. What additional manpower would be required by this office? And given that this deals with national security interests would it mean only Singapore citizens would be employed?

In conclusion, Mr Speaker, Sir, from our early years of Independence, we have confronted both regional and domestic threats and events that aimed to undermine our national security. These threats persist today.

In recent decades, countries have increasingly embraced openness to investments, fostering economic growth through joint ventures, local partnerships and mergers. However, with these investments comes the risk of malicious actors exerting undue influence over entities, compromising a nation's security interests. In Singapore's context, with an open investment environment, we remain vulnerable to the risk of malicious actors seeking to gain control of our critical entities. It is therefore imperative that we introduce this Bill to safeguard our national security interests.

Mr Speaker, Sir, this Bill sits at the crossroads. One path leads to a fortress, our nation shielded from harm. But another path leads to a tangled thicket, growth choked by uncertainty.

We must choose wisely. Therefore, I urge the Government to carefully consider the clarifications offered, scrutinise the potential ramifications of the Bill and glean valuable insights from the experiences of other countries. Only through comprehensive deliberation can we refine this legislation into a robust shield that protects our national interests without stifling innovation and investment.

In closing, I draw your attention to the earlier clarifications, namely:

(a) the potential impact on foreign investment due to the Bill's broad definition of "national security interests";

(b) the necessity for clear guidelines and robust oversight mechanisms to ensure transparency and accountability in applying the Bill;

(c) the delicate balance between national security and economic growth, and the risk of overly-stringent regulations hindering our long-term economic objectives;

(d) the importance of safeguarding the rights and interests of minority shareholders within designated entities;

(e) the imperative for a streamlined, efficient, and transparent review process that fosters trust and confidence in investors; and

(f) the question of the adequate resources for the new Office of Significant Investments Review and the potential implications for national security considerations.

Mr Speaker, Sir, addressing these concerns will not only pave the way for a more effective Bill. It also reaffirms Singapore's commitment to being a beacon of transparency, fairness, and a thriving economic engine for generations to come. Let us ensure that this legislation protects our future, not impedes it. Let us act now, without hesitation, to weave a future where security and prosperity flourish side by side.

Notwithstanding my clarifications, I support the Bill.

Mr Speaker: Ms Foo Mee Har.

2.36 pm

Ms Foo Mee Har (West Coast): Mr Speaker, I rise today to express my support for the Significant Investments Review Bill. As the global economic and political landscape becomes increasingly volatile, I agree that it is timely that we further tighten the oversight of critical entities that are crucial to the proper functioning of our economy and society. Singapore must guard against undue influence from players whose interests may not be aligned with ours.

As we debate the Significant Investments Review Bill, we should be reminded of instances when Singapore was on the receiving end of such considerations. If Members of this House remember in 2011, the Australian Treasurer rejected the takeover of ASX Limited by the Singapore Stock Exchange, ruling that the takeover could undermine Australia's position as a financial centre as well as jeopardise the stability of the country's financial system. The takeover was deemed not to be in Australia's national interest.

With the introduction of Significant Investments Review Bill, Singapore will align with numerous countries globally that have strengthened their investment management legislation. Those in the investor community that I spoke to, whilst initially surprised by this introduction, acknowledged and said they understand the necessity of such measures in the context of today's economic environment.

Mr Speaker, whilst supporting the Bill, we must recognise that introducing an investment screening regime in Singapore, a country renowned for its open-market economy, requires careful balance. As highlighted in the 2023 United Nations Article on "The Evolution of FDI Screening Mechanisms", it is important to find the proper balance between preserving an appropriate level of regulatory discretion to address national security challenges while ensuring an acceptable level of certainty and predictability to investors. Three crucial aspects – predictability, transparency and administrative efficiency – are key to effective implementation.

To achieve this, it is of utmost importance that the provisions in the Bill adopt a balanced rules-based approach, with a predictable screening process with minimal bureaucracy. The Bill should also align with international best practices and standards, be focused on high-risk entities and never, never over-extend its regime. We should also take into consideration how the Bill may impact the wider investor community, including minority shareholders.

With these factors in mind, I would like to make five key points pertaining to the Bill.

First, it is noteworthy that the provisions in the Significant Investments Review Bill apply to both local and foreign investors, based primarily on considerations of national security. This approach prevents potential biases or preferential treatment that could disadvantage either domestic or foreign investors, fostering a level playing field and enhancing transparency in the investment environment. So, this is a good thing. The distinction between foreign and local can also sometimes be arbitrary. So, knowing that all players are subject to the same scrutiny can reassure investors that the market operates under fair and transparent principles.

Second, the Bill seeks to protect the "national security interests" of Singapore by regulating significant investments in, and control of, critical entities. But like many speakers in this House, it is unclear what specific criteria, in regard to "national security interests", apply to entities under the Significant Investments Review Bill. Without a clear definition of what constitutes "national security interests", this may risk the new regime being seen as opaque, lacking in transparency and fuel investors' fear of the enforcement being arbitrary.

I do acknowledge the multifaceted dimensions of what national security might entail, and Singapore has our own unique security needs, economic structure and geopolitical context. However, investors will need a clearer set of definitions and guidance to understand how entities are designated and classified in practice.

So, I would like to ask the Minister whether the Government can provide further insights by stating, generally, sensitive areas that may be covered by the Bill such as critical infrastructure, advanced technologies, data and personal information, military and defence, public services and utilities or critical supply chain components.

For example, the UK's NSI Act identifies 17 sensitive sectors where acquisitions need to be notified for national security reasons.

Sir, understandably, the Government ought to retain the flexibility to be able to deal with the consequences and externalities that may arise, to update the definitions in line with the changing technological and geopolitical landscapes. But there is great, great merit in increased transparency around what is deemed as critical entities and this would be enhanced by a regular process of providing detailed decisions by which others could judge how the process operates.

Third, the designation and approval process must be efficient and streamlined with minimal bureaucracy. I appreciate the Bill sets out clear and detailed processes, including instances where affected parties will have the opportunities to submit representations before the Minister makes his decisions; and there are channels for reconsideration requests and appeals to an independent Reviewing Tribunal.

The Minister also mentioned in his Second Reading speech, that there will be a dedicated one-stop office that will be set up to provide guidance as well as address clarifications from affected stakeholders. I think this dedicated touchpoint is helpful and reassuring.

However, while Bill does stipulate expected turnaround time for designated entities to respond to the authorities, the other way round is absent – so the expected turnaround time from the Minister or the authorities to revert for approvals and appeals is unclear. As business transactions are often time-sensitive, it would be reasonable to consider providing clarity on turnaround times for approvals and appeals, so that companies may make the necessary arrangements to meet the requirements under the Bill as well as their own business obligations.

For example, the CFIUS commits to a specific timeline for its review process, such as a 45-day review period, once a filing is accepted as complete. If necessary, this can be followed by a further 45-day investigation.

Sir, a robust appeal mechanism adds a layer of fairness and legal recourse for investors, which is critical to maintaining trust. Currently, the Bill has provision for the setting up of a Reviewing Tribunal with members appointed by the President, at the advisement of the Cabinet, and the chairperson must be a Supreme Court judge. The members are also accorded judicial protection and immunity as a Judge of the High Court and decisions made by the Tribunal are deemed as judicial proceedings.

At the same time, members of the Reviewing Tribunal will have access to information in the areas of internal security, defence, technology, national security and commerce. These stipulations reflect the highest importance and emphasis placed on the Reviewing Tribunal.

I would like to ask the Minister, what would be the broad operating principles that go toward guiding the appointment of the Reviewing Tribunal members, with power to revoke the Government's decisions? How can the investor community be confident that the Reviewing Tribunal members are free from political and economic pressures influencing the review process?

Fourth, it is of utmost importance that the application of the Significant Investments Review process is focused on high-risk entities and never to over-extend its regime. Could the Minister clarify how many critical entities are expected to be captured under this new regime at the start and how the list may grow or change over time?

Sir, Singapore currently already has in place, a range of sectoral legislation that includes ownership and control safeguards to monitor and manage entities in regulated sectors, such as telecommunications, utilities and banking. The Significant Investments Review Bill is expected to be targeted and imposed on individual entities not covered by existing sectoral legislation. Could the Minister please clarify, how the sector-specific legislation will be effectively integrated with the Significant Investment Review legislation?

In light of the additional obligations that come with being identified as a critical entity, will the Government consider implementing compensatory measures to ensure these entities can effectively meet their responsibilities? For example, could a large data centre infrastructure, designated as a critical entity, be assured of priority access to electricity to maintain uninterrupted operations vital to its role?

Fifth, as the Bill entails a range of possible interventions ranging from divestment orders to remedial directions around equity interests and control over officers of designated entities, such actions may have implications on market perception and confidence of the designated entities' future performance and prospects. I am concerned about the impact to minority shareholders. For example, blocking a foreign acquisition may prevent a potential increase in share price, affecting potential gains for minority shareholders.

In some cases, the Government intervention might lead to liquidity concerns, especially if it involves critical sectors where investment options are limited. This could affect the ability of minority shareholders to sell their shares without incurring significant losses. How can the Government protect the rights of minority shareholders in such circumstances? For example, in cases where the Government intervention leads to expropriation or nationalisation, will it ensure that minority shareholders receive fair compensation for their shares?

To conclude, beyond the specifics hard-coded in legislation, it is imperative to recognise that, for businesses and investors, the consistent application of transparency in interactions with stakeholders after the Bill's passage holds paramount importance. The true measure of our conduct will be reflected in the investors' actual experiences with the authorities. This includes the efficiency with which their applications are processed and the openness of regulators regarding the progress and status of these applications.

Singapore boasts an exemplary track record of administrative efficiency. So, I hope the Ministry will maintain this standard of efficiency in the implementation of this Bill. Mr Speaker, Sir, I support the Bill.

Mr Speaker: Minister Gan.

2.50 pm

The Minister for Trade and Industry (Mr Gan Kim Yong): Mr Speaker, Sir, I thank hon Members for their support of the Bill as well as their comments and suggestions. I note that Mr Leong Mun Wai has not supported the Bill and I hope I can explain to him all his questions, and I hope he will reconsider his decision.

Allow me to now address some of the key points and questions Members have raised.

In developing the Bill, we have studied carefully the investment management legislation of other jurisdictions as well as our own current sectoral legislation. The Bill's provisions are largely similar to those in overseas legislation and are quite similar to those in our existing sectoral legislation, which most investors would therefore be familiar with.

These provisions are also consistent with our international trade obligations, a concern raised by several Members.

We have reached out to various local and international communities to explain the intent of the Bill. We have reassured them that the Bill has been carefully calibrated to balance between having adequate oversight over the ownership and control of these critical entities, while ensuring that Singapore's economy remains open and business-friendly, as well as investor-friendly. This will address the concerns raised by Mr Yip Hon Weng, Mr Shawn Huang and Mr Neil Parekh Nimil Rajnikant.

Mr Don Wee asked about the impact of existing sectoral legislation on companies in sectors, such as utilities and banking. While this will be more appropriately addressed by the respective sector lead agencies, I can assure Mr Wee that they have been working closely with the industry to address their concerns and minimise any adverse impact.

Let me emphasise that the provisions in this Bill will not be applied retroactively, a concern raised by Mr Mark Lee.

Mr Shawn Huang asked what constitutes "significant investments" under this Bill. We will focus on entities that would be significant to Singapore's national security interests, rather than to take a more expansive and comprehensive approach that other overseas investment screening regimes have adopted, as suggested by Mr Neil Parekh.

Ms Foo Mee Har, Mr Yip Hon Weng, Mr Neil Parekh, Assoc Prof Razwana Begum, Mr Raj Thomas and Mr Louis Chua have all asked for greater clarity on the definition of "national security".

Sir, I join many Members in asking for more and clearer definition of "national security". But sometimes, more is less. Having discussed and deliberated extensively – internally and with our advisors and various parties – and taking into account legislation introduced by other jurisdictions; I came to a conclusion that sometimes, less is more. Especially, in today's world where the global landscape changes very quickly. I would like to assure Members that we will be very judicious in implementing our Bill, but we need the flexibility to allow us to respond very quickly to changes in the global landscape.

National security considerations will evolve over time, and we need to keep the scope wide to allow us sufficient flexibility so that we can respond to unanticipated circumstances in good time. Providing a specific definition of "national security" or specific examples of such threats would not only constrain our ability to act quickly to address new risks that may emerge over time, but also expose Singapore's vulnerabilities.

Having said that, broadly speaking, in the context of the Bill, national security would cover areas critical to Singapore's sovereignty and security, including our economic security and the continued delivery of our essential services. As I have mentioned in my Second Reading speech, an example would be if an entity is a key provider of security-related functions, especially where there are few or no alternatives, then this entity will be a critical entity.

Ms Foo Mee Har and Mr Neil Parekh asked how sector-specific legislation will interact with the new Bill. The Bill is not an omnibus legislation and does not supersede ownership and control provisions in sectoral legislation. Sectoral legislation is intended to address sector-specific considerations, including those beyond national security interests, and may set out different obligations than those under this Bill. The Bill is intended to complement existing legislation and focus mainly on national security-related issues.

Mr Shawn Huang and Mr Leong Mun Wai asked how the Bill will affect designated entities' operations, capabilities and infrastructure. As mentioned in my Second Reading speech, the Bill's provisions relate only to ownership and control over designated entities and the Government has no intention to directly interfere with routine commercial decisions and operations of the designated entities.

Mr Liang Eng Hwa, Ms Foo Mee Har, Mr Don Wee and Mr Shawn Huang asked about specific factors that will be taken into consideration in designating entities. Mr Leong also asked which sectors will be covered by this Bill.

I have covered this in my Second Reading speech. To reiterate, we do not intend to designate specific sectors, but rather, we will designate specific entities. Considerations would include, whether the entity provides a critical function in relation to Singapore's national security interests and whether the entity is adequately covered by sectoral legislation already.

Mr Neil Parekh asked whether there will be inconsistencies in regulation of entities with a similar economic risk profile. Entities with similar profiles and importance to our national security interests will generally be equally considered for designation, although there may be other considerations that eventually result in different designation decisions.

Mr Yip Hon Weng, Ms Foo Mee Har, Mr Don Wee, Mr Neil Parekh, Mr Raj Thomas and Mr Louis Chua asked about potential entities that may be designated.

As most critical entities in Singapore are already adequately covered by existing sectoral legislation, we expect only a handful of critical entities to be designated under this Bill. Designated entities who are of the view that they no longer meet the designation criteria may also engage the Office of Significant Investments Review to request for a review of their designation status.

As mentioned in my Second Reading speech, we have reached out to all the entities that are being considered for designation and are in close discussions with them to understand their perspectives and explore ways to mitigate the regulatory impact on them. I would encourage Members not to speculate at this point, which particular entities will be designated. And as mentioned in my Second Reading speech, after the Act comes into force, all designations will be notified in the Gazette.

We intend to review the list and carry out assessments from time to time, as required. Nonetheless, we do not expect to significantly expand the list of entities in the near future. The addition of any entity to the list will be a carefully considered decision, which will continue to be based on whether designation is necessary in the interests of Singapore's national security. The Ministry will be judicious in exercising the powers under the Act and set out clear processes where possible, to minimise the overall impact on businesses and investors.

On the specific obligations under the Bill, Mr Don Wee asked how the Government will assess complicated fund sources and identify the beneficial owners. We will be as thorough as possible, including consolidating and making sense of information from various sources. But I concede that there will indeed be challenges in detecting instances of non-compliance when ownership structures are complex. This is, indeed, why we need adequate flexibility to be able to respond to emerging national security threats.

Mr Louis Ng commented that the definition of "associates" under the Bill is very wide. The definition is actually quite clearly set out in the Bill. For example, those with familial relations or employees of the same employer would be deemed as "associates".

Mr Louis Ng also asked how monitoring of shareholding of one's associates may be carried out in practice by individuals. In practice, if an incoming controller is an individual and is aware that its associates also have shareholding in the designated entities, it should take active steps to ensure that it is able to comply with the notification and approval requirements. For example, it could reach out to its associates and request that all parties update each other if they plan to make any changes to their respective shareholding.

Mr Louis Ng asked for examples of what a non-compliant party will need to show to prove that they were not aware of a contravention. This would be fact-dependent, depending on the specific facts and circumstances of each case. If, for example, the contravention occurred due to active action on the part of its associates, then the accused will likely need to demonstrate that it had no prior knowledge of this.

For completeness, even if an accused successfully proves that it was not aware of the contravention when it occurred, to avail itself of the defence, it will have to comply with other provisions in the Bill. These include, notifying the Minister of the contravention within the specified period after he has become aware of it and complying with the remedial directions that the Minister might have issued.

Mr Louis Ng asked why the thresholds for defence differ for similar provisions across clauses 18 and 19. The thresholds are different as they were set, taking into account the contexts and other associated measures.

Mr Louis Chua asked about the rationale for notification obligations that are applicable to 5% controllers. As the Member has pointed out, this is like that of the "substantial shareholder" definition in other legislation, such as the Companies Act and the Securities and Futures Act. This will allow the Minister to know that someone has now become a substantial shareholder in an entity.

Mr Louis Chua also asked if the Bill sufficiently covers various scenarios under which control may be effectively transferred, such as via different classes of shares or specific resolutions. On his cited example where this is done via different classes of shares, the direct control thresholds may apply, as they are determined based on holding of equity interests or voting power in the designated entity.

On his other example where this is done via specific resolution, the approval obligations relating to indirect control would be also applicable. This is based on qualitative tests of control, for example, whether parties are able to determine the policy of the designated entity.

Mr Neil Parekh asked about scenarios that may warrant remedial directions. They may be issued under certain circumstances. For example, a party may be ordered to transfer or dispose of equity interests held in the designated entities, if conditions of approval have not been complied with.

Mr Don Wee asked about the considerations underlying the Minister's decision on the timeframe stated in the remedial directions. The Minister will take into account all relevant factors and circumstances of each case. This would include balancing between addressing the extent of national security risk or harm and affording the parties reasonable time to perform the necessary action.

Mr Louis Chua asked about the factors that the Minister could consider in assessing the appointment or removal of key personnel. As mentioned in the example in my Second Reading speech, if we receive information that an individual has a track record of engaging in conduct or activities that could undermine our national security interests, then this would be taken into consideration.

Ms Foo Mee Har, Mr Yip Hon Weng, Mr Mark Lee and Mr Neil Parekh raised concerns about the clarity and efficiency of review processes. Sir, we have not imposed a constraint on turnaround times for the Minister's decisions in this legislation. This is because they may be diverse and complex considerations relating to specific cases. The Minister should be allowed adequate time to conduct thorough assessments.

And as mentioned in my Second Reading speech, we will set up a dedicated office under the Ministry. The office will work closely with the designated entities and affected parties. We will endeavour to process all applications expeditiously and avoid undue delays. Applicants are also welcome to check in with the office on the progress of their applications.

Ms Foo Mee Har and Mr Yip Hon Weng raised concerns about the impact of ownership and control provisions on designated entities, especially on minority shareholders.

Sir, we will be mindful of all shareholders and be judicious in the exercise of our powers, though this must be balanced against the need to ensure the reliability of critical functions that they provide and Singapore's national security interests. For example, for the Special Administration Order involving the transfer of property, rights and liabilities from the designated entity to a prescribed transferee, a payment scheme will also be established to determine the amount of payment to be made.

Mr Louis Ng, Mr Mark Lee and Mr Louis Chua have raised clarifications about the powers that can be exercised against any entity that has acted against the national security interests. We have consulted key stakeholders and they generally recognise the need for the powers to take action against any entity that have acted against our national security interests, even if they have not been designated under the Bill. They understood it should apply only to very few entities.

As mentioned in my Second Reading speech, two conditions must be met before powers under the Bill can be exercised. First, the entity must have acted against our national security interests and not merely pose potential threats to our national security. Second, the ownership or control transaction must have occurred within the two years prior to the above-mentioned action by the entity against our national security interests.

We do not expect there to be significant economic impact on the vast majority of non-designated entities, which have no proactive obligation to track, monitor or report transactions. As I have mentioned in my Second Reading speech, currently under the Insolvency, Restructuring and Dissolution Act, the Court may order the winding up of a company if it is used against Singapore's national security. The Bill provides a more appropriate and calibrated approach than winding up the company.

Following the review of the transaction under the Bill, directions may be issued, such as directing the transacting party to transfer or dispose of his equity interest in the entity. This will allow the entity to directly address the risk or harm, while continuing to operate.

Mr Liang Eng Hwa had a query about the considerations behind the two-year time bar. The two-year time bar seeks to strike a balance between providing a sufficient runway to commence a review under the Bill and giving investors certainty as to when transactions would no longer be subject to such powers.

Relatedly, Mr Mark Lee said that notwithstanding the time bar for the Minister's issuance of a review notice, there is no time limit for Minister's directions thereafter. We should ensure that the Minister has adequate time to conduct thorough assessments, as I have mentioned earlier, as well as carefully consider what appropriate directions ought to be issued. Nonetheless, let me assure Members that the Government will endeavour to resolve such national security-related matters expeditiously.

Mr Louis Chua had a specific query on how the Government will satisfy itself that an entity has acted against our national security interests. This will be dependent on the circumstances of the case. As mentioned in my Second Reading speech, the Minister for Home Affairs can also issue a certificate stating that he is satisfied that the entity has acted so.

Mr Yip Hon Weng asked if the Government will publish its decisions and the basis for doing so. Sir, we may not publish decisions or disclose the reasons for these decisions as they could pertain to sensitive matters of national security. Notwithstanding this, we may do so on a discretionary basis depending on the case-specific circumstances.

Mr Louis Chua cited the examples of the publication of annual reports in overseas jurisdictions and asked if we will have subsidiary legislation on disclosure of information relating to the Bill's implementation. Given that we intend to designate only a handful of entities under the Act and such designation will be notified in the Gazette, there may not be a need for the publication of an annual report per se.

Mr Liang Eng Hwa, Mr Yip Hon Weng, Mr Shawn Huang and Mr Mark Lee raised the need for safeguards and a robust oversight mechanism. Any aggrieved party can seek reconsideration from the Minister for his decisions. They may also further appeal to an independent Reviewing Tribunal.

Ms Foo Mee Har and Mr Yip Hon Weng raised specific queries about the composition of the Reviewing Tribunal. We will consult the Chief Justice on the nomination of the Supreme Court Judges, who will serve as chairpersons of the Reviewing Tribunal. The other members of the Reviewing Tribunal will be selected based on their areas of expertise and standing, just like any other tribunals or independent committees.

To ensure independent decision-making by members of the Reviewing Tribunal, the Bill expressly states that the Minister cannot alter the remuneration and terms of service to their disadvantage once they are appointed by the President. Further, as Ms Foo Mee Har has highlighted, members of the Reviewing Tribunal will also have the same legal protection and immunity as a High Court Judge.

Mr Louis Ng asked if the Reviewing Tribunal will be separately provided with all information, including information that may not be disclosed to the appellant, to make their decisions; and if so, whether the Reviewing Tribunal can take this into account when deciding on the appeal. Yes, the intent is to ensure that appeals before a Reviewing Tribunal are properly heard and thoroughly considered.

As such, the Reviewing Tribunal will be able to rely on all available information in making its decision on the appeal. We will also be working out the rules of the Tribunal in the coming months, which will be published in the subsidiary legislation.

Mr Yip Hon Weng asked whether the Reviewing Tribunal's decision will be binding on the Minister. The answer is yes.

Mr Louis Chua and Mr Leong Mun Wai asked about the limited judicial review provision in the Bill. As Mr Chua himself has pointed out, there is the possibility of ill-intentioned parties threatening our national security interests via ownership and control transactions.

It will not be suitable to make the Courts serve as an oversight body, given that decisions under the Bill may involve national security considerations and may, indeed, rely on evidence from intelligence sources that would be highly sensitive. I should reiterate that parties can already appeal to the Reviewing Tribunal on decisions by the Minister. In response to Mr Mark Lee, yes, parties can also appeal to the Tribunal on Special Administration Orders.

Mr Leong Mun Wai also asked about Police powers and why they should be given the powers to enter premises without warrant to carry out their investigations. This power is already consistent with the powers given to the Police under the Criminal Procedure Code, as well as many other domestic legislations to allow them to carry out their investigations. In matters relating to national security, these matters are time-sensitive and it is important to allow the Police officers and commercial affairs officers the flexibility and the ability to carry out their investigation in relation to this Bill.

Assoc Prof Razwana Begum had some queries about the implementation of the Act. We will set up the Office of Significant Investments Review under MTI, which will be the Competent Authority to administer and operationalise the Act. The Office will also serve as a dedicated one-stop touchpoint and closely engage all stakeholders to address their concerns and to minimise the impact on them, if any.

Sir, I believe I have addressed the key issues that have been raised by Members. The Bill will strengthen our position as a trusted hub for businesses to invest with confidence in a stable, safe and secure Singapore. It provides an updated toolkit of levers to enhance our economic resilience and strengthen national security amidst a rapidly evolving and increasingly complex operating landscape.

At the same time, I agree with Mr Mark Lee and Mr Don Wee that we should continue to build on our key fundamentals and strengths which underpin our attractiveness as a business hub, to capture new opportunities and support our businesses.

We are doing so through three broad strategies. First, expanding and deepening economic connectivity for Singapore through international economic partnerships and agreements. Second, renewing Singapore's relevance to the world by furthering cooperation in strategic growth areas, such as sustainability and digitalisation. Third, remaining open as well as protecting Singapore's access to key resources and preferential trade status, by leveraging existing and new collaborations; as well as international engagements.

We will continue to establish strong supply ecosystems and work with businesses, including encouraging them to adopt supply chain resilience efforts, such as diversification of sources to better cope with global supply chain disruptions. As a small and open economy, Singapore will need to keep at adapting our economic strategies in response to the changing global landscape.

I am heartened that Members have acknowledged the necessity and importance of this Bill, and support the Ministry's approach in balancing between economic growth and national security considerations.

With the support of the House today, this Bill will strengthen Singapore's position as a trusted hub for businesses to invest with confidence. Sir, I beg to move.

3.16 pm

Mr Speaker: Are there any clarifications for the Minister? I see none.

Question put, and agreed to.

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

Question put, "That Parliament will immediately resolve itself into a Committee on the Bill".

Hon Member said "No".

Mr Speaker: Mr Leong, would you like for your dissent to be recorded?

Mr Leong Mun Wai: Mr Speaker, Sir, sorry. I did not mean to stop the formation of the Committee of the whole House.

Mr Speaker: Are you objecting to the Committee stage?

Mr Leong Mun Wai: Mr Speaker, Sir, I am not objecting to the formation of the Committee.

Mr Speaker: Which was the question I had raised earlier, and I asked whether the ayes have it.

Mr Leong Mun Wai: Sorry, I missed that one. I raised my voice because I thought it was for objecting to the Bill. Can I register my objection to the Bill?

Mr Speaker: Can I suggest that when we go to the Reading of the Bill later, we register your dissent there?

Mr Leong Wai Mun: Yes, okay. Thank you.

Mr Speaker: So, let me repeat the question.

Question "That Parliament will immediately resolve itself into a Committee on the Bill" put, and agreed to.

The House immediately resolved itself into a Committee on the Bill. – [Mr Gan Kim Yong].

Bill considered in Committee.

[Mr Speaker in the Chair]

The Chairman: The citation year "2023" will be changed to "2024", as indicated in the Order Paper Supplement.

Clauses 1 to 57 inclusive ordered to stand part of the Bill.

Bill reported without amendment.

Question for Third Reading put, and agreed to.

Mr Speaker: Mr Leong, we will have your dissent recorded. Is that fine?

Mr Leong Mun Wai: Okay.

Bill accordingly read a Third time and passed.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 3.40 pm.

Sitting accordingly suspended

at 3.20 pm until 3.40 pm.

Sitting resumed at 3.40 pm.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]