Cross-Border Railways Bill – Speech by Dennis Tan

(Delivered in Parliament on 6 November 2017)

The Cross-Border Railways Bill is an important bill in various ways. It provides legislative support for the construction, management and operation of both the proposed Kuala Lumpur-Singapore High Speed Rail (HSR) and the Johor Baru-Singapore Rapid Transit System (RTS). Both the HSR and RTS will likely enhance cross-border trade and labour movement.

Equity control provisions

Mr Speaker, last month, I spoke at the Second Reading of the MPA Amendment Bill. In that Bill, we saw the introduction of onerous share transfer requirements. There is an obligation for a person becoming a 5% controller of a designated entity to notify the MPA. A person will also need to seek the prior approval of MPA before becoming a 25%, 50% or 75% controller or an indirect controller of a designated entity.

There is a very detailed section on what it means to be an associate or subsidiary for purposes of determining direct or indirect controller of an entity.
Any person intending to dispose interest that would result in that person’s shareholding falling below 75% or 50% of the total interest in a designated entity will be required to obtain prior approval from MPA.

When I asked for the rationale for the introduction of such onerous requirements, Senior Minister of State Lam Pin Min said the following. Please bear with me as I quote from him below as I think the rationale he has explained provided justification for the Government to introduce these controls:

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

…Under the Companies Act, a 5% shareholder is considered a substantial shareholder. Although a 5% shareholder typically does not have significant powers to drastically influence the direction of a company, it is still important for MPA to be informed of any new substantial shareholders of its designated public licensees.

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

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

…The acquisition controls enable MPA to have oversight of single persons becoming a new major shareholder of a designated entity. The disposal controls grant MPA oversight of existing shareholders from selling interest in a designated entity, whether to a single or multiple persons.”

Mr Speaker sir, having heard the Senior Minister of State on his justifications for the equity controls provisions in the MPA Bill, I wonder whether there is any reason why the same equity controls provisions not necessary for the Cross Border Railway Bill.

The Cross Border Railways Bill is an important bill providing for the construction, maintenance, operation and regulation of cross border railways between Singapore and Malaysia. The Bill provides that the Government may enter into a concession agreement relating to the construction, maintenance, operation and improvement of the railway infrastructure of a cross border railway with what is called a concessionaire. The Bill further provides for the concessionaire to appoint and enter into contract with one railway assets operator and a train service operator, both of whom are supposed to be regulated under the proposed Bill.

If one regards container or port terminal operators to be important enough to be subject to approvals for equity changes under the MPA bill, then surely, for a bill like the present one involving say one operator to be the railway assets operator and another one operator to be the train service operator, there is definitely a cause for the Government to impose similar equity control requirements. There will be concerns relating to customs, immigration and of course security as we are talking of many trains travelling between two countries on a daily basis. There may also be issues of economic security as we would like the train system to run profitably and efficiently. As this is a cross-border railway and in this climate where terrorist threats cannot be ruled out, the operators will need to pay attention and take steps to ensure the security of the rail assets and infrastructure as well as the security of the services and the passengers, staff as well as other users of the rail assets and facilities. We need to be assured of the shareholding of the companies who are concessionaires, licensees or operators lest they fall into wrong hands and bring unnecessary risks and consequences. For the same reasons as the Government has argued in the recent debate for the MPA Amendment Bill, surely the same equity controls provisions introduced in the MPA Act must also apply to all concessionaires, operators, subcontractors or licensees at all times or there will be an inconsistency. I look forward to the Minister’s reply on this.

Acquisition of private land

Clause 8 of the Bill empowers LTA to, for purposes of constructing the railways or building related infrastructure, enter private land and take possession of the land, and carry out acts like removing any building or structure, digging tunnel and constructing railway facilities. These are serious interferences with the rights of an owner of a private property.

Under Clause 8(3), Owners must be given at least two months’ notice. Mr Speaker, two months’ notice is too short for such draconian acts of taking possession of land, removing building or building tunnels on one’s land. If the work that is going to be done under this Clause compels the Owners to have to stop living there or to stop their businesses on the land, the Government should give a longer notice.

When a person decides to buy a private property, it will normally take up to about 10-12 weeks for the conveyancing process (ie the legal process for transfer of title) to complete. So if a two-month notice is given under this Clause, the owner of the property will probably not be able to have sufficient time to buy another property and complete the conveyancing process, not to mention to have time to look around for a suitable replacement property or time to do renovations for the new property. Whether it is a commercial property or a residential property, this is equally unfair. I hope the Government will reconsider this provision to give a longer notice period of at least 6 months.

Mr Speaker, it is currently unclear whether there are any plans for both the HSR and RTS to run through privately held land in Singapore. Is the Minister able to provide any indication at this point that the new railways will definitely require acquisition of private land?

Independent Safety Auditor

Part 9 of the Bill provides for the appointment of an Independent Safety Auditor as well as rail safety inspectors. Would the Minister please clarify whether the Independent Safety Auditor and the rail safety inspectors will also be auditing or inspecting the maintenance regimes of the railway and associated infrastructures? If the Government does not currently envisage these persons to perform these respective roles in terms of maintenance regimes for trains as well as infrastructure, would the Minister clarify who will perform such roles? Should we not have a specific provision in the Bill for a maintenance auditor and inspectors, with necessary support from LTA of course? In light of the ongoing fiasco regarding the SMRT’s maintenance efforts, I would urge the Government to put in place such measures at the beginning so that the cross border railways can start with the right operational and maintenance regimes and the right corporate culture for operations and maintenance, and avoid the pitfalls we have seen with SMRT maintenance as well as LTA’s oversight of SMRT’s maintenance. As the cross border railways involve two governments and possibly foreign concessionaire or licensees, this may be more complicated to manage. Please get this right from the start so that we do not have this fiasco with poor operating conditions and maintenance down the road.

Lack of provisions relating to conservation, environmental protection, public health risk, environmental impact assessment, and heritage impact assessment, as well as lack of provisions for public feedback and objections

This Bill involves a major construction project and long-term operation of regular high-speed rail services. However, the Bill is silent about conservation or environmental protection. Construction and operation of the railway will affect the surrounding areas and have a detrimental impact on residents and businesses. There should be provisions for environmental, health, and heritage impact assessments both before and during construction as well as periodically during operations to ensure that residents and businesses in the area are not adversely affected.

If there are environmental or health risks, there should be provisions for mitigation with responsibilities between operators and regulators clearly spelt out. There should also be provisions regulating noise and other forms of pollution to protect people living or working nearby.

There should be due diligence to ascertain (1) whether there are heritage sites nearby; (2) if so, how they may be affected by the construction and operation of the railway; and (3) what mitigation efforts should be put in place. We should have such measures in place at the onset before any problem even crops up.

Clauses 5 and 6 of the Bill pertain to the preparation and publishing of railway plans and maps and the finality of such plans and maps. Far beyond what are provided in Clause 5, I think we should allow (1) greater public information about planning decisions before they are made and (2) public feedback about such planning decisions. In that regard, Clause 6 which provides that no person has a right of objection to the delineation of land as railway area should be reconsidered or amended.

I would like to ask the Government how can the public give feedback or lodge any objection. Will the Government consider incorporating similar provisions on the tendering of objections/representation as well as hearings and public inquiries seen in the Planning Act and Planning (Masterplan) Rules?

Double punishment by both Singapore and Malaysian regulators

I would also like to clarify with the Minister how the Government proposes to handle the possibility of both regulators from opposite sides of the Causeway meting out penalties against the concessionaire, licencees, operators or subcontractors for the same infringements or breaches of any regulatory requirement.
Has the Malaysian Parliament introduced the equivalent Bill and looked into this issue? Both regulators should make this clear to the concessionaire, licensees or operators at the onset.

Update on progress for the projects

On the issue of meeting timelines, as the projects also substantially involve Malaysia and quite heavily so, is the Minister able to tell this House whether he is confident that both countries will be able to abide by the projected timelines for construction and launch of the projects. Should we be concerned at all that the outcome of the next Malaysian General Elections may have any effect on the progress of the projects? Perhaps the Minister can reassure the House.

Finally, may I also ask the Minister to assure this House that the Government will ensure that all contracts will be awarded to companies which will be able to provide sound and quality construction or engineering that will not saddle us with future problems of poor design, workmanship, repairs and inefficiency?