Significant Investments Review Bill—speech by Louis Chua


Mr Speaker, in its press release on the third of November 2023, the Ministry of Trade and Industry (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 vs. non-state actors, conventional vs. 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 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 WTO report for example suggest that trade is gradually becoming reoriented along geopolitical lines. But we can also see for ourselves the trade tensions between the two largest economies of the world and how it has cascading effects on the investment environment globally, and how corporate M&A transactions have been blocked in the interests of national security. 

Observations about the regulatory environment

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

The 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 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 PM’s words, a “symbiotic relationship between the PAP and the 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, SIA has one non-tradeable special share issued to the Ministry of Finance, 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 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. 

A comparison to CFIUS and the UK NSI Act

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 United States (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 (i) control transactions (ii) investments, and (iii) 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; artificial intelligence; 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 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: (i) an entity acquiring or increasing its interest to at least 25 per cent (or such that it crosses the 50 per cent or 75 per cent thresholds); (ii) an entity acquiring voting rights in qualifying entity such that the acquirer could secure or prevent the passage of any class of resolutions; (iii) 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 SGX, 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?

Bill-specific clarifications

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 subsection (3) references criteria that the Minister may specify and subsection (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. 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 honourable 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 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.