Speech by Minister Gan Kim Yong during the Round-Up Speech for the Significant Investments Review Bill

Introduction

1. Mr Speaker, Sir, I thank honourable Members for their support of the Bill as well as their comments and suggestions.

2. I note Mr Leong Mun Wai has not supported the bill. I hope I can answer all his questions, and that he will reconsider his decision.

3. Allow me to address the key points and questions Members have raised.

(A) Overarching Queries 

(A1) Formulation of Bill Parameters

4. In developing the Bill, we have studied carefully the investment management legislation of other jurisdictions as well as our own current sectoral legislation. 

5. The Bill’s provisions are largely similar to those in overseas legislations, and are quite similar to those in our existing sectoral legislation, which most investors would already be familiar with. 

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

7. We have reached out to various local and international communities to explain the intent of the Bill.

8. 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. 

9. This will address the concerns raised by Mr Yip Hon Weng, Mr Shawn Huang, and Mr Neil Parekh.

10. Mr Don Wee asked about the impact of existing sectoral legislation on companies in sectors such as utilities and banking.

11. 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.

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

13. Mr Shawn Huang asked what constitutes “significant investments” under the Bill. 

14. 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. 

(A2) Coverage of Bill

15. 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”.

16. Sir, I join many Members in asking for more and a clearer definition on “national security”.

17. But sometimes, more is less.

18. 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 the conclusion that sometimes, less is more.

19. 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 respond very quickly to changes in the global landscape.

20. National security considerations will evolve over time, and we need to keep the scope wide to allow us sufficient flexibility to respond to unanticipated circumstances in good time.

21. 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.

22. 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.

23. 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.

24. Ms Foo Mee Har and Mr Neil Parekh asked how sector-specific legislation will interact with the new Bill.

25. The Bill is not an omnibus legislation and does not supersede ownership and control provisions in sectoral legislation. 

26. 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.

27. The Bill is intended to complement existing legislation and focus mainly on national security-related issues.

28. Mr Shawn Huang and Mr Leong Mun Wai asked how the Bill will affect designated entities’ operations, capabilities, and infrastructure.

29. 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 designated entities.

(B) Provisions that Apply to Designated Entities

(B1) Entity-based Designation

30. 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 Mun Wai also asked which sectors will be covered in this Bill.

31. 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.

32. 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.

33. Mr Neil Parekh asked whether there will inconsistencies in regulation of entities with a similar economic risk profile.

34. 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.

35. 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. 

36. 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.  

37. 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.

38. As mentioned in my Second Reading speech, we have reached out to all entities that are being considered for designation, and are in close discussion with them to understand their perspectives and explore ways to mitigate the regulatory impact on them.

39. I encourage Members not to speculate at this point which particular entities will be designated. 

40. As mentioned in my Second Reading speech, after the Act comes into force, all designations will be notified in the Gazette.

41. We intend to review the list and carry out assessments from time to time as required.

42. Nonetheless, we do not expect to significantly expand the list of entities in the near future.

43. 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.

44. 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.

(B2) Obligations Relating to Ownership and Control Changes

45. On the specific obligations under the Bill, Mr Don Wee asked how the Government will assess complicated fund sources and identify the beneficial owners.

46. We will be as thorough as possible, including consolidating and making sense of information from various sources. 

47. But I concede that there will indeed be challenges in detecting instances of non-compliance when ownership structures are complex. 

48. This is indeed why we need adequate flexibility to be able to respond to emerging national security threats.

49. Mr Louis Ng commented that the definition of “associates” under the Bill is very wide.

50. The definition is quite clearly set out in the Bill.

51. For example, those with familial relations, or employees of the same employer would be deemed as “associates”.

52. Mr Louis Ng also asked how monitoring of shareholding of one’s “associates” may be carried out in practice by individuals.

53. 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.

54. For example, it could reach out to its “associates” and request that all parties update each other if they plan to make any change to their respective shareholding.

55. 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.

56. This would be fact-dependent depending on the specific facts and circumstances of each case.

57. 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.

58. 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 still have to comply with other provisions in the Bill.

59. These include notifying the Minister of the contravention within the specified period after he has become aware of it, and complying with remedial directions that the Minister might have issued.

60. Mr Louis Ng asked why the thresholds for defence differ for similar provisions across clauses 18 and 19. 

61. The thresholds are different as they were set taking into account the contexts and other associated measures.

62. Mr Louis Chua asked about the rationale for notification obligations that are applicable to 5% controllers.

63. 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.

64. This will allow the Minister to know that someone has now become a substantial shareholder in an entity.

65. 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.

66. 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.

67. On his other example where this is done via specific resolution, the approval obligations relating to inindirect control would be applicable.

68. This is based on qualitative tests of control, for example, whether parties are able to determine the policy of the designated entity.  

(B3) Remedial Directions

69. Mr Neil Parekh asked about scenarios that may warrant remedial directions.

70. They may be issued under certain circumstances.

71. 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.

72. Mr Don Wee asked about the considerations underlying the Minister’s decision on the timeframe stated in remedial directions.

73. The Minister will take into account all relevant factors and circumstances of each case.

74. 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.

(B4) Appointment and Removal of Key Personnel

75. Mr Louis Chua asked about the factors that the Minister could consider in assessing the appointment or removal of key personnel.

76. 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.

(B5) Business Impact on Designated Entities

77. 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.

78. Sir, we have not imposed a constraint on turnaround times for Minister’s decisions in this legislation.

79. This is because there may be diverse and complex considerations relating to specific cases.

80. The Minister should be allowed adequate time to conduct thorough assessments.

81. As mentioned in my Second Reading speech, we will set up a dedicated Office under the Ministry.

82. The Office will work closely with the designated entities and affected parties.

83. We will endeavour to process all applications expeditiously and avoid undue delays.

84. Applicants are also welcome to check in with the Office on the progress of their applications.

85. 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.

86. 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.

87. For example, for 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.

(C) Provisions that Apply to Entities that have Acted against National Security Interest

88. 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 our national security interests. 

89. 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.

90. They understand it should apply only to very few entities.

91. As mentioned in my Second Reading speech, two conditions must be met before powers under the Bill can be exercised.

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

93. 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.

94. 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.

95. 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. 

96. The Bill provides a more appropriate and calibrated approach than winding up the company.

97. Following the review of the transaction under this Bill, directions may be issued, such as directing the transacting party to transfer or dispose of his equity interest in the entity.

98. This will allow the entity to directly address the risk or harm, while continuing to operate.

99. Mr Liang Eng Hwa had a query about the considerations behind the two-year time bar.

100. The two-year time bar seeks to strike a balance between providing a sufficient runway to commence a review under the Bill, while giving investors certainty as to when transactions would no longer be subject to such powers.

101. 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.

102. We should ensure that the Minister has adequate time to conduct thorough assessments, as well as carefully consider what appropriate directions ought to be issued.

103. Nonetheless, let me assure Members that the Government will endeavour to resolve such national security-related matters expeditiously. 

104. Mr Louis Chua had a specific query on how the Government will satisfy itself that an entity has acted against our national security interests.

105. This will be dependent on the circumstances of the case. 

106. 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.

(D) General Provisions

(D1) Publication of Decisions and Information

107. Mr Yip Hon Weng asked if the Government will publish its decisions, and the basis for doing so.

108. Sir, we may not publish decisions or disclose the reasons for these decisions as they could pertain to sensitive matters of national security.

109. Notwithstanding the above, we may do so on a discretionary basis depending on the case-specific circumstances.

110. 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.

111. Given that we intend to designate only a handful of entities under the Act, and such designations will be notified in the Gazette,, there may not be a need for the publication of an annual report per se.

(D2) Reconsideration Requests and Appeals 

112. 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.

113. Any aggrieved party can seek reconsideration from the Minister for his decisions.

114. They may also further appeal to an independent Reviewing Tribunal.

115. Ms Foo Mee Har and Mr Yip Hon Weng raised specific queries about the composition of the Reviewing Tribunal.

116. We will consult the Chief Justice on the nomination of the Supreme Court Judges, who will serve as chairpersons for the Reviewing Tribunal.

117. 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.

118. 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.

119. 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.

120. 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 decision; and if so, whether the Reviewing Tribunal can take this into account when deciding on the appeal.

121. Yes, the intent is to ensure that appeals before a Reviewing Tribunal are properly heard and thoroughly considered. 

122. As such, the Reviewing Tribunal will be able to rely on all available information in making its decision on the appeal. 

123. We will also be working out the rules of the Tribunal in the coming months, which will be published as subsidiary legislation. 

124. Mr Yip Hon Weng asked whether the Reviewing Tribunal’s decision will be binding on the Minister.

125. The answer is Yes.

(D3) Limited Judicial Review

126. Mr Louis Chua and Mr Leong Mun Wai asked about the limited judicial review provision in the Bill.

127. 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. 

128. 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.

129. I should reiterate that parties can already appeal to the Tribunal for decisions by the Minister. 

130. In response to Mr Mark Lee, yes, parties can also appeal to the Tribunal on Special Administration Orders.

(D4) Enforcement Powers 

131. 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.

132. This power is consistent with the power already given to the police under the Criminal Procedure Code, as well as many other domestic legislations to allow them to carry out their investigations.

133. In matters relating to national security, these matters are very often time sensitive and it is important to allow the police officers and commercial affairs officers the flexibility and ability to carry out their investigations in relation to this Bill. 

(E) Stakeholder Engagement

134. Assoc Prof Razwana Begum had some queries about the implementation of the Act.

135. We will set up the Office of Significant Investments Review under the Ministry of Trade and Industry, which will be the Competent Authority to administer and operationalise the Act.

136. It will also serve as a dedicated one-stop touchpoint and closely engage with all stakeholders, to address their concerns and to minimise the impact on them, if any.

Conclusion

137. Sir, I believe I have addressed the key issues that have been raised by Members. 

138. The Bill will strengthen our position as a trusted hub for businesses to invest with confidence in a stable, safe, and secure Singapore.

139. 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.

140. 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.

141. We are doing so through three broad strategies.

142. First, expanding and deepening economic connectivity for Singapore through international economic partnerships and agreements.

143. Second, renewing Singapore’s relevance to the world by furthering cooperation in strategic growth areas such as sustainability and digitalisation.

144. 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.

145. 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.

146. As a small and open economy, Singapore will need to keep at adapting our economic strategies in response to the changing global landscape.

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

148. With the support of the House today, this Bill will strengthen Singapore’s position as a trusted hub for businesses to invest with confidence.

149. Sir, I beg to move.