Significant Investments Review Bill: Significant Concerns

Mr Speaker Sir,

The Significant Investments Review Bill seeks to protect Singapore’s national 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.

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 and military supplies, telecoms, 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 Act 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 Act? Will these sensitive economic areas extend to areas which are not considered sensitive in other jurisdictions, such as the media?

The National Security and Investment Act in the UK for example, has subsidiary legislation that designates 17 sensitive areas of the economy, such as artificial intelligence, defence, and transport, where acquisitions must be subject to government review.

While the proposed Act 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 Act so that Parliament has greater oversight over the designation of these critical entities.

Secondly, under Section 27 of the proposed Act, critical entities will  be required to seek approval for the appointment of key officers. Section 28 of the proposed Act 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 its 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 Act. Can the Government explain why these broad powers are necessary under the proposed Act, 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 decisions by a minister would still be appealable to an independent Reviewing Tribunal, Section 46 of the proposed Act 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 question in any other court of law.

Judicial review is only allowed under extremely narrow grounds, to ensure that the procedures under the Act, 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 Act.

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 (ISA) and Foreign Interference Countermeasure Act (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 Significant Investments Review Bill.  PSP believes that while it is fundamentally in the interest of our national security to ensure that key entities in critical 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 Act. These banks are already under domestic control and their operations are subject to regulation by the MAS.

These outages demonstrated that it is not enough to just have oversight over the ownership and management of critical entities if we are really serious about ensuring national security.

There must be a whole-of-country approach towards ensuring the resilience of these 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.

And 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 on 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 Act 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

Thank you.

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