Potential ‘designated entities’ under Singapore’s Significant Investments Review law have been contacted
ALL entities being considered for designation under Singapore’s upcoming Significant Investments Review Act have been contacted by the government over the last few months, Minister for Trade and Industry Gan Kim Yong said in Parliament on Tuesday (Jan 9).
“That means if you have not been approached, you are not currently being considered,” he said in his opening speech of the debate on the proposed law.
Though MPs called for clarity on the sorts of entities that might be affected, Gan said that the scope of the law must remain wide, to give the government enough flexibility to respond to changing security concerns.
The proposed law, passed in Parliament on Tuesday, will scrutinise significant investments in critical entities that are not yet covered by existing legislation. For instance, government approval will be required for major changes in ownership.
This applies to specific “designated entities”. The list has yet to be released, but will be published in the Government Gazette after the law comes into effect.
The list is expected to contain only “a handful” of entities. It will be reviewed as required, but there are no plans to “significantly expand” it in the near future. Designated entities may be removed if they no longer meet the relevant criteria.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Engaging the potential designated entities has helped the government understand their perspectives and concerns, said Gan. The government has also been able to clarify the obligations that these entities will have if they are eventually designated, and explore ways to mitigate the regulatory impact on their businesses.
Specifics and definitions
The entity-specific approach was chosen to reduce the regulatory burden, and should minimise the impact on Singapore’s business and investment position, Gan said.
One factor in deciding to designate an entity is whether it provides a critical function in relation to Singapore’s national security interests, he noted. This includes being a key provider of security-related functions, especially where there are limited or no alternatives.
In general, entities with similar economic risk profiles and importance to national security interests will receive equal consideration – but decisions could still differ due to other considerations, he said.
In the debate, MPs raised concerns over the law’s lack of clear definition of “national security interest”.
Nominated MP Raj Joshua Thomas said it is important to have consistency of definitions across statutes, especially when the definition confers “wide-ranging powers” to the ministers.
He noted that the specific phrase “national security interest” seems to appear only in the Significant Investments Review Act, in contrast to phrases such as “national interest” in the Personal Data Protection Act, and “national security and interest” in the Societies Act.
A clear definition would also guide the new Office of Significant Investments Review on what activities to look out for, he added.
Addressing these worries in his closing speech, Gan said that broadly speaking, national security “would cover areas critical to Singapore’s sovereignty and security, including our economic security and the continued delivery of our essential services”.
But as national security considerations will evolve, the law’s scope must be kept wide so that the government has enough flexibility to respond to unanticipated circumstances, he said.
A specific definition of national security or examples of 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”, he added.
MPs also asked how long the authorities might take to review a transaction under the law. Gan replied that no time constraints have been imposed, to allow for the thorough assessment of cases.
Nevertheless, acknowledging the impact of these provisions on affected entities and their minority shareholders, he said the government would be “judicious” in its exercise of powers.
MP Yip Hon Weng (Yio Chu Kang SMC) asked if the government will publish the basis and findings of its reviews of transactions, to provide transparency and instil confidence in investors.
Gan said that the government might not always do so, depending on each case’s circumstances, as reviews could involve sensitive national security-related matters.
Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai worried that the law would bestow “sweeping legal powers”, theoretically allowing the government to interfere with business decisions of private companies.
“Today, Parliament is asked to support the Bill without knowing which are the economic areas and companies that are likely to be affected,” said Leong, who eventually voted against the Bill.
In response, Gan noted that some powers granted to authorities under the proposed law are consistent with the powers that other laws already grant to them.
Copyright SPH Media. All rights reserved.
