The Significant Investments Review Bill introduces measures to safeguard national security while addressing economic and business concerns.
SINGAPORE: Parliament passed the Significant Investments Review Bill (SIRA) on Tuesday (Jan 9), establishing a framework to scrutinize significant investments—local or foreign—into entities deemed critical to national security. The law aims to complement existing sectoral safeguards in areas like telecommunications, banking, and utilities.
Why Is This Law Needed?
Trade and Industry Minister Gan Kim Yong cited increasing global uncertainties, such as financial crises, supply shortages, and geopolitical tensions, as reasons to bolster Singapore’s investment management regime. Countries like the US, UK, and China have already implemented similar frameworks.
“This update ensures Singapore remains equipped to handle emerging risks and maintains national security amid a shifting global landscape,” Mr. Gan said.
How Will It Work?
Entity-Based Designation:
Only a select group of critical entities will be subject to the law, identified based on their essential functions to national security. These entities will be listed in the Government Gazette, with updates made as needed.
Mandatory Approvals for Key Changes:
Buyers acquiring 5% or more of such entities must notify the Trade and Industry Minister.
Thresholds of 12%, 25%, and 50% require ministerial approval.
Key appointments like CEOs or directors will also require approval.
Winding Up Restrictions:
Designated entities cannot dissolve or wind up without consent to ensure continuity of essential services.
Additional Provisions:
The government may review transactions involving any entity—designated or not—if they act against national security within two years of ownership changes.
Concerns Raised During Debate
Definition of National Security:
MPs questioned the lack of a clear definition, with some arguing it could cause uncertainty among investors. Minister Gan countered that flexibility is necessary to address evolving threats and prevent exposing vulnerabilities.
Ministerial Powers and Judicial Review:
Concerns were raised about the broad authority granted to the Trade and Industry Minister and the exclusion of judicial review. Mr. Gan clarified that national security decisions often involve sensitive intelligence and are unsuitable for court oversight.
Impact on Foreign Investments:
MPs highlighted the potential for the law to deter foreign investors due to perceived opaqueness. Mr. Gan assured that processes would remain transparent and aligned with international norms to minimize disruptions to business activities.
Minimizing Regulatory Burden
The government emphasized an entity-based approach to limit regulatory impact, affecting only a small number of businesses. Efforts will focus on proportionality to balance national security concerns with economic growth.
Looking Ahead
While the initial list of designated entities is expected to remain limited, periodic reviews will assess the necessity of including additional entities. The Ministry of Trade and Industry has also committed to working closely with stakeholders to mitigate the regulatory impact.
“The ministry will be judicious in exercising powers under the Act and ensure minimal disruption to businesses and investors,” said Mr. Gan.
