Transport Sector (Critical Firms) Bill

Mr Speaker, I beg to move, “That the Bill be now read a Second time”.

Connectivity is essential to Singapore and our economy. Many Singaporeans rely on public transport for our daily activities. In 2023, we had over seven million daily rides on our public buses and trains, serving millions of commuters across the country. We also rely on our air and sea connectivity to bring in essential goods, support the growth of our industries and connect Singaporeans with the rest of the world.

Last year, Changi Airport served about 59 million passengers. We are now connected to about 420 cities through almost 120 airlines. As one of the busiest ports in the world, our maritime hub is a key node in global supply chains. Our port is linked to 600 ports around the world and in 2023, our container throughput reached a new high of 39 million, 20-foot equivalent units.

Our connectivity to the world is critical not just during peacetime. During the COVID-19 pandemic, it was our strong connectivity to the region and beyond that allowed Singapore to receive and send out critical supplies, including food and medical essentials. Within Singapore, we worked hard to maintain connectivity by keeping our public transport services running, so that our essential workers could continue to go to work to fight the crisis and keep the country going.

All these benefits cannot be achieved without the safe and reliable provision of essential air, land and sea transport services at all times and under all circumstances, including during a crisis. Sir, the proposed Bill today therefore aims to put in place measures to enhance the resilience of essential transport services in Singapore and set the foundations to protect Singapore against possible future disruptions to our essential transport firms. Our objective is to help Singapore prepare for possible extreme scenarios that may happen in future, so that we are ready for these risks.

For example, we cannot rule out the risk of malicious actors gaining control and adversely influencing our key transport entities, jeopardising the provision of essential transport services in Singapore. We have built strong relationships with the firms in our transport ecosystem and worked closely with them during peace time and crises, such as the COVID-19 pandemic, to provide safe, reliable and efficient services for Singapore, and we want to make sure that they continue to do so in the years ahead.

We are not alone in making moves to safeguard our essential transport services. Other countries have taken steps to protect their strategic assets too. In 2021, the United Kingdom (UK) passed the National Security and Investments Act, which allows the government to intervene in certain acquisitions made that could harm the UK's national security. In the United States (US), the Foreign Investment Risk Review Modernisation Act was passed in 2018 to expand the jurisdiction of the Committee on Foreign Investment in the US, to address growing national security concerns over foreign investment in US companies or operations.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]

Singapore already has regulations in place to safeguard some of our essential sectors. For example, the Banking, and Telecommunications Acts require approval to be sought before a person acquires a certain percentage of shares or voting power in a licensee; and prior to the appointment of key personnel, such as the chief executive officer (CEO). The Electricity, and Public Utilities Acts also provide similar levers to safeguard the management and provision of electricity and water in Singapore, to ensure that these supplies always remain available.

More recently, the Ministry of Trade and Industry passed the Significant Investments Review Act, or SIRA, which provides the Government with an updated set of regulatory levers to manage threats posed by significant investments into critical entities. Likewise, the Ministry of Transport (MOT) would like to propose measures to ensure that our essential transport systems are able to serve Singapore and Singaporeans effectively, now and in the future.

Mr Deputy Speaker, please allow me to explain why we are introducing a transport sector-specific regulatory framework through this Bill, which is consistent across the air, land and sea transport sectors, instead of going through a broad-based legislation like SIRA. A sector-specific approach can better allow us to customise the regulatory oversight needed for Singapore's transport ecosystem and balance these objectives with the commercial and business impact on our transport entities and their investors.

We have, therefore, designed our regulations in a calibrated and targeted manner. The proposed Bill does not seek to regulate the standards and performance of our entities' day-to-day operations. Rather, it seeks to protect key transport entities against the risk of malicious actors exerting undue influence over these entities and ensure that commercial decisions made by the entities do not jeopardise their ability to provide essential transport services in Singapore.

Some entities may be involved in the provision of other services outside of transport, such as food and beverage (F&B) or advertising services. The Bill will not focus on regulating these services; instead, it is targeted at the parts of the entity that directly provide essential transport services in Singapore.

In addition, we also recognise that different entities play different roles to deliver a range of services. Since last year, MOT has been engaging the key transport entities to better understand how regulations can be practically implemented. We have taken in their feedback when designing this Bill and we are mindful of the commercial impact. MOT will, therefore, differentiate some controls based on entities' roles, responsibilities and functions, which I will elaborate in a later part of my speech.

Finally, the Bill serves to harmonise our laws across the transport sector, to reduce the regulatory burden on entities as they evolve, as well as provide greater consistency on commercial and investment controls in the Singapore transport ecosystem. This Bill seeks to introduce a common regime covering both licensees and non-licensees across air, land and sea transport, to apply a consistent set of regulatory controls and to create a transparent and predictable regulatory environment for entities.

Sir, I will now go into the key features of the Bill. The Transport Sector (Critical Firms) Bill makes amendments to the following Acts: the Bus Services Industry Act, or BSI Act; the Civil Aviation Authority of Singapore Act, or CAAS Act; the Maritime and Port Authority of Singapore Act, or MPA Act; and the Rapid Transit Systems Act, or RTS Act.

After they are amended, these Acts will continue to be administered by the relevant authorities of these Acts, namely CAAS, the Land Transport Authority of Singapore (LTA) and MPA. These authorities will also be responsible for designating relevant entities under the framework.

Please allow me to explain how we plan to classify the affected entities. Sir, the Bill is not intended to apply to every entity which provides a transport service in Singapore. Instead, we will take a targeted approach by regulating entities within the transport sector that meet the following criteria: first, they are involved in the provision of essential transport services in the air, land or sea transport sectors; and second, they are strategically important within the sector, for example, if the services they provide are not readily replaceable due to significant market share or specialised expertise.

Clauses 3, 19, 30 and 47, together with the new Schedules, set out the definitions for an "essential transport service" under each sector, by listing out the key services necessary for Singapore's air, land and sea transport networks. For land, we intend to include, among other things, public bus and rail services. For aviation, we plan to include, among other things, airport and ground-handling operations and passenger and cargo air services at Changi Airport. For maritime, we plan to include, among other things, port and marine services and facilities, as well as services which support the provision of sea transport, such as water supply and bunkering.

Clauses 8, 23, 33 and 52 of the Bill insert provisions empowering the regulatory authorities to designate entities that are involved in the provision of essential transport services in Singapore. Entities can be designated as a "designated operating entity", if they directly provide any essential transport service in Singapore and are strategically important within the sector; or a "designated equity interest holder", if they hold an equity interest in a designated operating entity and have a strong nexus of control over their subsidiaries that are designated operating entities.

This is because such individuals or organisations may influence key decisions related to the provision of essential transport services in Singapore. For the rest of my speech, I will be referring to both "designated operating entities" and "designated equity interest holders" collectively as "designated entities", otherwise, it will be quite a mouthful.

The designation process will be initiated after the Bill is passed and the law is brought into force. We intend for the relevant firms to be designated by the end of this year, if Parliament approves the Bill. The notifications of designations will specify the date on which designation of a company takes place and will be published in the Gazette at least 14 days before the date that designation takes place. This is provided for in the new section 28E of the BSI Act; the new section 64 of the CAAS Act; the amended section 86D of the MPA Act; and the new section 21E of the RTS Act.

The Bill will introduce legislative levers across the four Acts in three aspects: ownership controls; management appointment controls; and operations and resourcing controls.

Ownership of a firm allows parties to exercise influence over its direction, management and decisions. The Bill will allow relevant authorities to have oversight of significant changes in effective control of designated entities, through the following requirements: any person who becomes a 5% controller of the designated entity, which is when we consider a person to be a substantial shareholder of a company, must notify the relevant authorities within seven days after becoming a 5% controller.

Any person who intends to become or cease being a 25%, 50% or 75% controller of the designated entity must seek the relevant authority's approval. At these levels of shareholding, controllers hold significant influence over a company, such as the ability to pass and block ordinary and special resolutions. In addition, the relevant authority's approval must be sought for: first, any person intending to become an indirect controller, meaning someone that is able to exert control over the directors or trustee managers of the designated entity; or, any person intending to acquire and continue operating without disruption, any part of the designated operating entity's business relating to the provision of essential transport services. This is to provide the relevant authority with oversight over all acquisitions of the entity or parts of the entity, regardless of whether there are significant changes to its service provisions.

Lastly, designated entities must notify the relevant authority within seven days after becoming aware of any of the ownership changes which I just described.

The second set of controls pertain to the appointment of management by designated entities. These controls allow the relevant authorities to be kept apprised of changes to the key personnel responsible for the management of our critical transport firms, as well as operations affecting the continued provision of the essential transport service.

The Bill will require designated entities to seek the relevant authority's approval for the appointment of its CEO and Chairperson of its board of directors; and designated operating entities who are also licensees to seek the relevant authority's approval for the appointment of its CEO, Chairperson, as well as all directors of its board.

Lastly, the Bill will introduce controls over operations and resourcing, to ensure that companies are equipped and able to operate their services under all circumstances, including times of crisis and in the event of significant changes within each sector. We propose that designated entities should notify their respective authorities as and when there are material developments or events, so that the relevant authorities are kept aware of events that could materially impede or impair the provision of essential transport services in Singapore and are able to take mitigation measures early and as needed.

While current licensing regimes for each sector may also include notification requirements, this Bill codifies the notification requirements across all transport sectors for designated entities. The Bill will require designated entities to notify the relevant authority of such events, for example, if a designated operating entity outsources a material function in providing essential transport services in Singapore, or if they face material events or legal proceedings that may impair or impede the provision of essential transport services in Singapore. This list of events will be circumscribed.

To help companies comply with these requirements, the relevant authorities will issue a set of advisory guidelines after the Bill is approved by Parliament and comes into effect. These advisory guidelines will provide practical guidance for these notification requirements. We have provided for this by clauses 13, 25, 41 and 55 of the Bill.

Next, the Bill inserts provisions extending the relevant authority's step-in powers, via a Special Administration Order, to cover designated operating entities and licensees across the air, land and sea transport sectors. This is to safeguard service continuity in extreme scenarios and unlikely events, such as where a designated operating entity or licensee becomes unable to provide essential transport services safely and reliably.

Currently, the relevant authorities could issue Special Administration Orders to their licensees, as a safeguard in extreme scenarios. The step-in powers in this Bill are similar in scope, in that they extend to designated operating entities that directly provide essential transport services in Singapore, but are not licensees.

Sir, I wish to assure Members that step-in powers will be exercised as a last resort to deal with extreme scenarios. They are meant to safeguard the provision of essential transport services in Singapore. For example, this could include when a designated operating entity becomes insolvent and unable to pay its debts and this, in turn, jeopardises the continued provision of essential transport services. We will not intervene in the commercial operations and affairs of the entities in the normal course of business.

If we need to use the proposed step-in powers, we will exercise them judiciously and only for the period which they are required for. The new section 33E of the BSI Act, the new section 75 of the CAAS Act, the new section 89B of the MPA Act and the new section 27D of the RTS Act in the Bill update the related provisions in existing Acts. For example, the Bill will provide for the issuance of ancillary directions, to specify the period in which the step-in order will take effect and other relevant conditions to achieve the purposes of the order when step-in powers are exercised.

Finally, business continuity planning requirements. The Bill introduces the power for CAAS to impose requirements for business continuity planning for designated operating entities in the air transport sector. They will not apply to designated equity interest holders. The Bill does not cover these requirements for designated operating entities in the land and sea transport sectors, as we can subject them to similar requirements via licence conditions.

Let me now touch on the general and miscellaneous provisions under the Bill. The Bill will allow the relevant authorities to issue remedial directions for breaches of controls relating to ownership and management appointments, among others. These remedial directions could include directing the disposal of equity interest and removal of key appointment holders, if prior approval was not sought or if conditions of approval were breached.

The Bill will employ the following penalties to enforce the regime. We have specified penalties for the breach of any control, including conditions of approval, relating to ownership, management appointments and notification requirements for certain events, the breach of any remedial direction as well as non-compliance with duties under a Special Administration Order.

The penalties will take reference from penalties under existing Acts, which take into account the operating environments within each sector. The amended section 41 of the BSI Act, the new section 67K of the CAAS Act, the new section 86HD of the MPA Act and the new section 28 of the RTS Act provide for avenues of appeal to the Minister against certain decisions made by the relevant authorities, including the designation of an entity, refusal to grant approvals required for controls over ownership or management appointments and the issuance of remedial directions.

Sir, I would like to highlight that MOT will be moving a Notice of Amendment during the Committee stage to address two drafting changes. First, we seek to amend clause 39 to remove subsection (3) of the new section 86HB of the MPA Act as it is not necessary in view of subsection (2) of the same. Next, we propose to make a technical amendment to clause 19 for consistency with the prevailing legislative drafting style for the numbering of sub-paragraphs.

Mr Deputy Speaker, Singapore’s connectivity is one of our greatest assets and something we must continue to safeguard carefully to protect the interests of Singapore and Singaporeans. We shall do so in a calibrated and targeted manner, by striking a balance between what is useful and practical for our transport sector and minimising the commercial and cost impact on companies and investors. We will continue to work closely with the industry and stakeholders on the implementation of this Bill. Sir, I beg to move.

Question proposed.

Mr Saktiandi Supaat.

Mr Deputy Speaker, Sir, our transport sector is the lifeblood and key backbone of our economy. It is essential to our survival as a nation. And I am not saying that just because I chair the Government Parliamentary Committee (GPC) for Transport.

Our air and seaports have maintained long-running reputations as efficient and reliable hubs. Our public buses and trains supported an average of 7.19 million rides per day in 2023, ferrying our workers to and from their various roles contributing to the Singapore economy.

I do not think anyone can seriously argue against the need to ensure the resilience of critical firms in the sector as well as the essential services they provide. But as we are not looking to nationalise these private businesses, the real question is how we can safeguard their resilience in a way that does not make us less business-friendly by ensuring comprehensibility, predictability and fairness.

According to MOT’s press release, this Bill is intended to complement the Significant Investments Review Act, or SIRA, which was passed in January 2024 and came into effect on 28 March 2024. Many of the ownership and management controls in this Bill mirrors those that are contained in the SIRA.

Could the Minister explain – and I think Minister had sort of explained to some extent in his opening speech – why the proposed regime in the Bill is necessary; and possibly can he elaborate a bit more why the critical transport sector firms could not have been designated under the SIRA? I think the Minister also elaborated to some extent in his opening speech but maybe a further elaboration on that would be useful.

The reliable provision of essential transport services must necessarily be in the "interest of Singapore's national security" under the SIRA. In addition, are these sectors specific application of the Critical Firms Bill also being practised in other jurisdictions globally and can MOT share if we are in line with international practices and coverage?

My primary concern with duplicative or overlapping regimes is the potential confusion that businesses and investors would face. Having multiple different regulatory regimes would already drive up investment and compliance costs as the actors will need to figure out their optimal compliance strategy routinely or for any material transaction. We should be cautious of the impact on our competitiveness as a business and investment hub. When would a specific entity be designated under the general SIRA and when would an entity be designated under an equivalent sectoral regime? And what is the practical difference if one is designated under the latter, as compared to the former?

We have not possibly gone through that, because we have not passed this Bill. But if we do, if there is a situation, it would probably be useful to know.

This is especially since we have already set up the Office of Significant Investments Review, or OSIR, in connection with the SIRA, which will "serve as a dedicated one-stop touchpoint and closely engage all stakeholders to address their concerns and to minimise the impact on them". So, would an entity that is designated, or is soon to be designated, under this Bill be able to approach the OSIR for guidance as well? Or would they have to look elsewhere?

I understand that the designation of entities will take place as soon as the later half of this year, if this Bill is passed by Parliament. I believe the authorities will also be engaging with entities to be designated in relation to compliance with the requirements of this Bill. So, when will the initial list of designated entities be made known? While it is expected that our Mass Rapid Transit (MRT) and public bus operators will be designated, what about taxi and ride-hailing companies which have seen their average number of daily trips increase 18.6% from 517,000 in 2020, to 613,000 in July 2023?

Like the SIRA, this Bill contemplates targeting particular entities as opposed to an entire sector or industry, the lack of clear criteria may give rise to criticisms of arbitrariness. So, are there any guidelines on the criteria, for example, by annual turnover or by market share, that will see a company identified as a designated entity?

For companies that are not on the initial list of designated entities, may I ask whether will there be subsidiary legislation setting out clear procedures and timelines leading up to the Minister’s designation of such entity? As various consequences follow from the designation of an entity, having clear timelines will allow investors and businesses to plan and execute their responses, such as divestment or "off-ramping".

Finally, how often will we review the list of designated entities under the four Acts? I think Minister in some ways alluded to that in his opening speech as well, maybe it would be useful to repeat that again.

Next, the Bill requires buyers into designated entities to notify the relevant authority after becoming a 5% controller, and to obtain prior approval of the relevant authority before becoming a 25%, 50% or 75% controller.

The definitions of "equity interest" and "controller" that are sought to be introduced mean that it will not only catch transactions of shares in the designated entities, but also transactions of shares and interests of indirect parent entities one or more levels up the chain. This is further complicated by the range of financial instruments that are traded on the market – equity-linked notes or products – could potentially lead to "control" for the purpose of notification and approval thresholds.

Would there be detailed guidelines on how such "control" is to be determined and how the relevant authorities intend to continually monitor such ownership changes, especially with varied products and instruments traded out in the market, not just regionally but possibly globally as well?

How should we reconcile these new powers with those that we have traditionally deployed? For example, I believe the Singapore Government continues to hold a "golden share" of Singapore Airlines such that it has the ability to outvote the other shares and exercise corporate control. In other scenarios, we have been able to effectively direct the actions of certain companies by subjecting them to licensing regulations, as well as contracting conditions for those who rely heavily on Government contracts. Are these methods no longer effective?

I also note that the Bill covers not only Singapore-incorporated companies, but foreign companies that carry out activities in Singapore. Such foreign companies may also be subject to mandatory regulation in their home jurisdiction, including requirements on ownership and control. Do we foresee a scenario where companies may be subject to conflicting regulatory requirements in their home jurisdiction and under this Bill, if it is passed? How would such a conflict be resolved? For example, the company may be required to remain 50% state-owned in its home jurisdiction, but that may not be in the interests of ensuring the resilience of our critical transport entities and the essential services they provide.

In a similar vein, has the Ministry considered whether it would need to exercise its regulatory power to veto the appointment of CEOs, Board Chairmen and even Board members differently where such officers are being appointed by a foreign headquarter or shareholder in a designated entity? What if this causes a breach of Board appointment rights granted under a shareholders' agreement? We must be careful that our legitimate right to safeguard our national interests is not perceived as simply a protectionist move to reserve these appointments in transport firms for Singaporeans or worse, for Government appointees.

Finally, while I agree that this Bill is necessary in-principle, subject to the Minister’s clarification on its interaction with the SIRA, its effectiveness and result will ultimately depend on the practical operation of the relevant provisions.

While the maximum penalties for non-compliance for designated entities under the CAAS Act and the MPA Act range from $500,000 to $1 million, or a three-month imprisonment, the maximum penalties for equivalent offences for our bus and MRT service providers is a fine up to $50,000 or up to six months’ imprisonment. This difference appears to be deliberate so my question for the Minister is whether the penalties are significant enough to incentivise compliance without being overly burdensome for the operators? So, how were the different figures derived?

It is also heartening to note that we have been, and intend to continue, adopting a consultative approach in designating entities and exercising regulatory powers under this framework. Could the Minister share some further details on the scope and status of the consultation and agreement?

Beyond these behind-the-scenes engagement, public clarity is also equally important. Reassuring investors that our system remains transparent, fair and predictable is the best way to keep our doors open for business, while safeguarding our interest in keeping our critical transport entities and essential transport services resilient.

Mr Speaker, Sir, notwithstanding the clarifications sought, I support the Bill.

Mr Dennis Tan.

Mr Deputy Speaker, the Transport Sector (Critical Firms) Bill proposes to set up a designated entities regime for entities providing essential transport services.

The Bill requires approvals for ownership controls and changes, and various notification requirements, for example, change of ownership or whether there are events which materially impede or impair the provision of such services, together with remedial directions.

The Bill provides for the amendments in four key legislations relating to air, sea and land transport legislations, namely the Bus Services Industry Act 2015, the Civil Aviation Authority of Singapore Act 2009, the Maritime and Port Authority of Act 1996 and the Rapid Transport Systems Act 1995.

Mr Deputy Speaker, the Workers' Party supports the Bill's intention to strengthen the resilience of key firms in the air, land and sea transport sectors in Singapore, safeguarding their provision of essential transport services, enhancing resiliency and shielding them from potential national security threats. However, I have some clarifications for the Minister.

To start off, may I ask the Minister to share what were some of the risks observed in the prospective critical entities that drove the need for this Bill and for the proposed amendments to the sectoral Acts?

Mr Deputy Speaker, under this Bill, only fit and proper persons may be given approval to 25%, 50% or 75% controllers of designated entities. Will the Government be publishing any guidelines in the subsidiary legislation on how a person is fit and proper as required under the Act, similar to what is envisaged in the recent Significant Investments Review Act, or SIRA?

Part 1, section 33D and Part 4A, section 27C of the Bill enables the Minister to issue a Special Administrative Order or other orders in relation to an entity who is a bus service licensee or a railway licensee, respectively, should the Minister be satisfied that one or more conditions be met.

These conditions include, among other things, the Minister being satisfied that either type of licensee has contravened the conditions of their licence, the licensee is unable to pay its debt, or in the interests of safety, security and continuity of the provision of such services, or in the case of a railway licensee having contravened the conditions of their licence. However, the Minister could also administer such an order should they view such a decision as being in the public interest.

Could the Government provide greater clarity on what public interest entails within the context of the current Bill? This is important as it will not only provide greater clarity for the management of the affected companies, it will also provide clarity and transparency to investors of such companies on the circumstances in which the Government can exercise such powers.

In fact, the recently passed SIRA empowered the Government to impose controls on the shareholders and management of designated entities' interests of national security. On the other hand, the current Bill proposes that the Government be given similar powers over the shareholders and management of designated operating entities and designated entities in the public interest.

Could the Minister elaborate on what would be the difference in the criteria for assessing national security and the public interest in the respective legislations?

Aside from setting out the Minister's prerogative to issue certain orders and directions to designated entities, the Bill also requires designated entities to report certain matters to the authorities.

Under the Bill, designated entities are required to notify authorities of any event that could materially impede their ability to carry out their essential transport services in Singapore. Should such a situation arise in future, in the interest of transparency, will the Government be informing the public such events or even irregularities reported and the remedial actions taken?

I would also like to ask the Government what is the mechanism which will be put in place to ensure that it can carry out any pre-emptive checks on operators who are reluctant to report any such events or irregularities or to ensure timely rectifications. While legislation would play a crucial role in buttressing the resilience of Singapore's public transport system, the importance of implementing operational measures should not be ignored as well.

Part 4, section 27D of the Bill allows the Minister to halt a railway licensee from the provision of their services. However, in the event that there is no replacement operator willing to take over at short notice, for example, if they perceive such a move as being financially untenable, would LTA be in a position to take over the operation?

In 2016, the then Transport Minister, Mr Khaw Boon Wan, suggested that LTA should enhance their operational and maintenance team to take over operations should the need arise. Would the Government clarify whether LTA currently has the capacity to take over as the operator of last resort and, if not, whether there is an actionable plan or a road map towards such an outcome?

Mr Deputy Speaker, while three out of four Class 1 bus licensees are privately owned, SMRT and PSA Corporation are owned by Temasek and Changi Airport Group (CAG) is directly owned by the Government. Given that PSA Corporation and CAG are already directly or indirectly owned by the Government, in respect of these companies, are the proposed controls on ownership and key personnel in this Bill redundant in any way? Does the Government have any plans to divest its stakes in PSA or CAG?

Apart from CAG, which will be designated as a Class 1 designated operating entity, does MOT or CAAS intend to designate the companies that the Minister has mentioned in his earlier speech as Class 2 designated operating entities? May I know what are the considerations for their designation? Have those entities been consulted on the designated entity framework and have they provided any feedback on the impact that such designation might have on their operations? Does the Minister anticipate that the designated entity framework may, in any way, affect Changi Airport's attractiveness for investment from companies that may have more efficient and innovative or just different approaches to airport services?

Clause 28 defines essential transport services in the CAAS Act as various services and facilities provided to support the operations at Changi Airport. Operations at Seletar Airport are thus not deemed to be essential transport services. Has Seletar been excluded from the designated entity framework because it only serves smaller aircraft or will the framework eventually be extended to Seletar as well?

Likewise, for the maritime sector, clause 44 includes services, such as bunker supply and delivery, salvage operations and passenger ferry operations, in the definition of essential transport services. To what extent will the current players be affected? For example, will all the current bunker companies supplying fuel within port limits be included? What about the companies that supply bunkers also in the outside port limits area?

The provisions in the Bill lack a clearer framework that outlines regulatory processes, procedures, criteria and guidelines to help the Government to regulate or operationalise in accordance with the intentions of this Bill. I hope such details will be included clearly in the subsidiary legislation after the Bill has been passed.

Just now, the Minister mentioned about the advisory guidelines and I hope such guidelines will be included in the subsidiary legislation eventually. This is important, lest the lack of such details and transparency may affect investor confidence in the transport sector or in affected companies, particularly the certainty of their investment in the longer run.

For the implementation of SIRA, an Office of Significant Investments Review (OSIR) was set up. Will there be similar offices set up to implement the requisite governance regime required by this Bill in all the different sector agencies involved? If so, what will be the regulatory or legislative powers granted to personnel involved?

Finally, before I end, I would like to ask for the Government's assessment of the impact of this Bill on the economic competitiveness potential of the affected transportation sectors. Particularly for maritime and aviation, will there be any impact on Singapore's trade flows?

Mr Deputy Speaker, I look forward to the Minister's replies. Notwithstanding the clarifications, I am seeking the Workers' Party's support for the Bill.

Mr Louis Ng.

Sir, our transport sector is a key pillar to Singapore's survival. Not only are we a major aviation and maritime hub, our people depend on our world-class public transport network to get around and go to work to power our economy.

I thus support this Bill, which grants the Government additional powers to ensure that critical transport firms are led by the right people and operated in a way that will maintain the stability of our transport system. I have two points of clarifications to raise.

First, can the Minister clarify how MOT expects this Bill to impact the transport sector in Singapore? How many entities do we expect to be designated as essential transport services under this Bill? Has the Ministry consulted with these entities and, if so, can their concerns be shared with this House?

Next, is MOT concerned that increased regulation and control may affect the growth of our transport sector by slowing down business transactions or increasing barriers for new enterprises? For example, startups which intend to grow to become key players in our aviation and maritime ecosystem may face challenges in bringing in new members if there is a risk of greater regulatory controls in the future. Or are we expecting that these new safeguards will allow an even more open approach to the transport sector, allowing more private ownership and foreign investment, even for critical areas? For example, will we invite more overseas transport operators to join our public bus network?

My second clarification relates to the interaction of this Bill with the Significant Investments Review Act. Member Saktiandi spoke about this and the Minister also spoke about this in his opening speech.

Many of the provisions in this Bill and the powers granted to MOT mirror those that are found in the Significant Investments Review Act. This creates five very similar legislative regimes, resulting in unnecessary complexity in applying the individual statutes.

Can the Minister clarify why separate rules are created in this Bill under four different Acts, rather than being implemented through the framework created under the Significant Investments Review Act? For example, all the entities to be designated under this Bill could have been designated as critical to national security instead and brought under the purview of the Office of Significant Investments Review instead, with MOT being consulted as a subject matter expert.

One such complexity is that under the Significant Investments Review Act, the Minister's decisions can be appealed to a Reviewing Tribunal rather than judicial review under the Courts. However, decisions under this Bill would be appealed through the judicial review process.

While I trust both forums to be capable of reaching fair decisions, the difference in forum might lead to inconsistency in process or outcomes, which may create uncertainty for business owners. How will the Government ensure that we have a consistent approach between critical transport services and significant investments? Notwithstanding my clarifications, Sir, I stand in support of the Bill.

Mr Yip Hon Weng.

Mr Deputy Speaker, Sir, before I begin, I declare I am working in an investment firm that has investments in the transportation sector in Singapore.

There can be no doubt our transportation sector is the lifeblood of Singapore's economy. The disruptions caused by the COVID-19 pandemic and ongoing regional conflicts highlight the importance of ensuring its resilience. While increased controls are critical, it is important to understand how they might impact certain areas. In this regard, I would like to seek some clarifications on the Bill's potential impact.

First, Mr Deputy Speaker, Sir, can we achieve the goal of strengthening security measures, without stifling innovation within these critical firms? Singapore has a strong reputation for being a hub for innovation. We want our transport sector to be at the forefront of pioneering new technologies like autonomous vehicles, green transportation solutions and logistical optimisation. Therefore, I believe that it is crucial to explore ways to amend this Bill to strike a balance between security and innovation. Can we create a framework that allows these critical firms to flourish while safeguarding our national interests?

Second, Mr Deputy Speaker, Sir, we need to consider the potential impact on businesses. The Bill proposes a new designated entities regime. This includes increased Government oversight for critical transport firms. How will this regime affect the day-to-day operations of these critical firms? Will they face significant disruptions or bureaucratic hurdles? Furthermore, is there a concern that the additional regulatory burden could discourage foreign investment or hinder the growth of local firms?

For instance, clause 6 of the Bill mandates prior written approval from LTA for seemingly basic actions like becoming a partner in a Class 1 operating licence holding partnership. Even managerial appointments require LTA's approval. This raises concerns about the intent of Government reach in personnel decisions. Does this hinder a company's ability to function as a truly private entity, considering that even CEO and board appointments require agency approval? Will such overarching Government involvement in the appointment of personnel affect the ability of such companies in attracting talent? Will our companies risk losing talent because of the time lag or the need for approval sought to appoint them? Global and even local talent can easily find appointment in jurisdictions with less red tape.

The Bill's agency approval process for acquiring and liquidating shares has potential implications for stock trading of these companies. The potential time delays associated with approvals could hinder stock exchange activities and impact profitability, potentially leading to financial losses.

We need to ensure that this Bill does not create unnecessary obstacles. In this regard, it would be helpful if the Government could provide a clear picture of the compliance costs associated with this Bill. Are there ways to minimise the burden on businesses while still achieving the desired security outcomes? How will this Bill affect operations in the bus contracting model in attracting companies to bid as their appointments would come under scrutiny? Can the Government provide a timeline for the approval process for manpower?

Third, Mr Deputy Speaker, Sir, another key concern is the potential impact on competition within the transport sector. Increased Government control might inadvertently lead to consolidation, with larger firms potentially absorbing smaller ones. While some consolidation might be inevitable, we need to ensure that the Bill does not create an environment where smaller firms struggle to compete under stricter regulations.

Thus, it is crucial to explore how the Bill can be structured to ensure a healthy level of competition within the critical transport sector. A competitive landscape fosters innovation and keeps costs in check. We do not want the Bill to inadvertently create monopolies or duopolies that could preclude innovation and, ultimately, raise costs for consumers. Will Singaporeans have to pay more for public transportation as a result?

Fourth, Mr Deputy Speaker, concerns remain about transparency and the appeal process. The Bill grants the Minister for Transport broad powers to intervene in critical firms. While national security is paramount, how will transparency be ensured around these interventions? What is the process for appealing decisions made by the relevant authorities under the Bill? Is there an independent body that can review Ministerial decisions or decisions by the authorities?

Additionally, the Bill needs to clearly define the circumstances that will justify the Minister intervening in the operations of a critical transport firm. What specific circumstances would trigger such intervention and how would such Ministerial intervention be carried out in a transparent and accountable manner? What safeguards are in place to prevent the Minister from abusing these powers?

Fifth, Mr Deputy Speaker, Sir, the Bill's impact on our global standing needs careful consideration. Singapore's position as a major transportation hub cannot be overstated. How will this Bill affect our attractiveness to foreign investors and our overall standing in the global transport industry? We need to ensure that the Bill does not create unnecessary friction with our international trade partners who rely on Singapore's efficient transport system.

Can the Government assure that the Bill will not unfairly disadvantage foreign companies, compared to local firms? Maintaining a level playing field is critical for attracting and retaining foreign investment in this vital sector.

In conclusion, Mr Deputy Speaker, Sir, this Bill seeks to enhance Government oversight over critical companies in our air, land and sea transport sectors, recognising their pivotal role in Singapore's economy and resilience. However, as we deliberate on this Bill, several key considerations emerge.

First, we must balance security measures with fostering innovation within these firms, safeguarding our reputation as an innovative hub. Amendments to the Bill should aim at nurturing innovation while upholding security imperatives.

Second, potential impacts on businesses necessitate scrutiny. The proposed designated entities regime may impose bureaucratic hurdles and deter investment, potentially affecting stock trading and operational efficiency. We need clarity on compliance costs and timelines for approval processes.

Third, concerns arise regarding competition and consolidation within the sector. We must ensure that the Bill fosters healthy competition, preventing monopolies or duopolies that could stifle innovation and raise costs for consumers.

Fourthly, transparency and an effective appeal process are paramount. The Minister's broad powers require clear justification and accountability mechanisms to prevent misuse.

Fifthly and finally, we must assess the global implications of the Bill. Singapore's attractiveness to foreign investors and its global standing as a transportation hub should not be compromised.

In closing, while supporting the Bill, we must address these concerns to strike a balance between security, innovation, business viability, transparency and global competitiveness. We must ensure that the Bill enhances rather than hinders our transport sector's growth and resilience. Let us work together to strengthen our transport sector without impeding its progress and global competitiveness. I support the Bill.

Ms Poh Li San.

Mr Deputy Speaker, Sir, I am an employee in the aviation sector. I refer to the Transport Sector (Critical Firms) Bill and I would like to highlight certain concerns. One of them applies across all industries, which is, how are we going to be able to attract good talents in leadership roles? Another is, how do we navigate our strategic business expansion and diversification plans?

For any economy to grow, the transport infrastructure must facilitate the flow of goods and services, and people mobility must be well-connected to businesses around the world. Transport is the key to economic growth and competitiveness for trade. In the words of Mr Gan Kim Yong, our Trade Minister, "Trading is Singapore's lifeline. But more than just that, it is in Singapore's DNA". Our airport and seaport are the catalysts of our economic development. Let us talk about them.

[Mr Speaker in the Chair]

Despite disruptions to the global supply chain during the COVID-19 pandemic, our ports remained opened and never stopped operating. Food supplies and vaccines may never reach our people if operations were disrupted. Our land transport is the lubricant of our society. Our MRTs and public buses transport must work seamlessly on a day-to-day basis to cater to more than seven million trips daily with minimal disruptions.

It is no easy feat when it comes to running a transport organisation. The operators never get to rest. In fact, they are busiest when everyone else is taking a break, especially during weekends and holiday seasons. Respective operators must continuously ensure tip-top maintenance and operations standards, these are all the work needed just to prevent disruptions.

Many Singaporeans would remember the 2015 to 2016 period, when SMRT trains suffered frequent disruptions. Everyone was asking then, how could our national MRT system deteriorate to such a poor state? Breakdowns are not usual for large-scale and complex transportation systems. It is not easy to detect deep-seated weaknesses at early stages. It is like the boiling frog phenomenon. Things will appear to be going well at first. Then, a series of small disruptions start to happen before a catastrophic failure occurs unexpectedly. By then, it is usually too late. A massive amount of damage control and recovery will be needed to restore normalcy.

I am happy to know that in a short span of eight years, we have managed to turn around an unreliable MRT transport system to one of the most reliable systems in the world today. Nothing short of being remarkable. It took a herculean effort across the whole of land transport ecosystem and required extremely determined and collaborative teams with total dedication and discipline to achieve this.

Not only our public transport is now amongst the best in the world, our airport and seaport have also consistently achieved world-class accolades. It is now necessary to safeguard our achievements.

This is what we have learnt: major disruptions are preventable if long-term planning and investments are addressed well to ensure growth capacity and high-quality services. We, therefore, must always be ready to improve to ensure that our transport sector is reliable and has a good system in place.

Systems are determined by people. The people in charge must have a vision to serve Singaporeans. A bad system will only cause disruptions. One of the most important areas that we must address is the appointment of its Board Chairman and CEO.

There is a saying that fish rots from the head. This cannot be truer for big corporate organisations, which had collapsed because of poor top leadership. Companies like Enron, Lehman Brothers and closer to home, Hyflux, come to mind. Hence, it is vital for the Board Chairman and CEO of designated entities to be visionary leaders who can embrace their purpose and mission.

The transportation industry is a demanding, complex and highly regulated business. Suitable candidates may not be readily available. Hence, for succession, the appointment of an appropriate CEO and Chairman is naturally challenging. Why are we limiting our choices for good talent when we should be reconsidering our regulations to bring in the best?

I would like to seek clarification from the Minister, if MOT will share the broad criteria for the Chairman and CEO for the designated entities, such as nationality, professional background, experience and track record in the relevant transport industry, and so on?

The Transport Sector Bill requires designated entities to obtain approval from the relevant authority changes in ownership controls, to safeguard against adverse influence. Over the last few years, governments around the world have introduced screening of foreign direct investment on the grounds of national security and public order concerns. In Europe, UK, America and many other countries, Acts, such as National Security and Investment Acts, Foreign Investment Risk Review Modernization Act have all been reviewed.

Singapore has a domestic market that is of a much smaller scale compared to these countries. Hence, incentives for new players are less than attractive and it is obviously harder to attract major foreign transport operators to operate here. Moreover, with the transport industry so highly regulated, entry barriers are high. Foreign transport operators may find compliance requirements too stringent and operations and safety requirements too onerous and costly.

The Transport Sector Bill does not encourage healthy competition. The lack of competitors in any industry will result in a lack of efficient operations in the long run and it is natural that the service standards will decline. Any entity that has the advantage of monopolisation will naturally hesitate to invest. It is about money. It is about business. Such an outcome would be detrimental to all Singaporeans whose lives and livelihoods are heavily dependent on reliable and efficient air, land and sea transport systems.

The Singapore aviation, maritime and land transport sectors are currently dominated by a few major players, such as Changi Airport Group, Singapore Airlines, Singapore Airport Terminal Services, Port of Singapore Authority, SMRT and SBS Transit. Sadly, even without foreign competition here, many of these companies will still need to venture overseas to diversify their business portfolios to seek additional revenue. Over the years, the revenue from their global businesses for some of these companies has surpassed the revenue from their Singapore businesses.

Regardless of that, competition is still necessary to ensure that services are all up to necessary standards. Designated entities having to seek too many approvals from the relevant authority for significant investment and divestment decisions will cause undue encumbrances which, in turn, will reduce their interest to assist us. I hope the Minister will clarify, under what circumstances will decisions on changes in business ownership controls be blocked by MOT and with reference to the non-transport related business arms of designated entities, what level of flexibility and independence would investors have?

Perhaps the most important concern is that the Transport Sector Bill accords the Minister the step-in powers, in the extreme scenario if a designated operating entity is unable to provide transport services safely and reliably. The intent of the Transport Bill must not intervene with the operations of these commercial companies. Understandably, the experts know best. However, should there be a situation of mismanagement, then the Minister would be vested with the legal powers to replace the leadership in the affected designated entities.

I mentioned the boiling frog analogy earlier. Unfortunately, it may often be too late to rectify the weaknesses after a catastrophic failure occurs. Recovery may take a long time or may not ever materialise. My concern is the effectiveness and practicality of leadership takeover to prevent further disruptions.

I hope the Minister can elaborate on the following: one, what are the trigger events for the Minister to exercise his step-in powers; two, when step-in powers are exercised, how would MOT and its regulatory agencies take over or support the team to stabilise the situation; and three, does MOT also have the powers to mandate the competitors of the affected designated operating entity to take over its responsibilities to minimise service disruptions?

Mr Speaker, Sir, I believe there is no necessity to reiterate just how critical the reliability and efficiency of the transport services are to Singapore. Our laws and policies must be shaped to protect our transportation systems that have been painstakingly built up over the years. Our transport laws and policies must be passed based solely on the interest of serving Singaporeans.

Notwithstanding my queries to the Minister, I support the Transport Sector (Critical Firms) Bill.

Mr Ang Wei Neng.

Mr Speaker Sir, I would like to declare my interest as the CEO of Strides Premier, a subsidiary of SMRT. Against the backdrop of escalating geopolitical tensions, it is imperative that Singapore takes proactive measures to safeguard the operations of its essential transport services. The Transport Sector (Critical Firms) Bill stands as a testament to our unwavering commitment to fortify the resilience and security of our transport networks. I wholeheartedly support this Bill. Nonetheless, I would like to bring forth a few clarifications and suggestions for consideration.

Firstly, for transparency, there will be a need to establish clear criteria for evaluating the suitability of the Chairmen and CEOs of designated entities. Should these pivotal positions be reserved exclusively for Singaporeans, or should Permanent Residents also be considered? Furthermore, what stance should we adopt regarding foreigners occupying these critical roles?

Secondly, when a designated operating entity is predominantly owned by a specific equity interest holder, key personnel of the said equity holder could have significant influence over the designated operating entity's operations. What mechanisms would MOT employ to ensure that the Chairmen and the CEOs of such designated equity entities are aligned with the public interest of Singapore? How would MOT respond if a designated equity interest holder is not aligned with Singapore's interests?

Thirdly, in the unfortunate event of a designated operating entity failing to provide essential transport services safely and reliably, we understand MOT stands prepared to issue a Special Administration Order. We are keen to understand how MOT has been preparing for such an eventuality. Will it enlist staff experienced in managing essential transport services to strengthen its bench strength during peace time in preparation for such contingencies? Will there be sufficient experience personnel and capabilities within MOT ready to step in and fill the gap?

Fourthly, it is worth noting that point-to-point (P2P) platform service providers are currently not regulated under the Transport Sector (Critical Firms) Bill. However, disruptions to such platform services could have far-reaching implications for those who rely on this means of transport for their daily commute or other purposes. I understand earlier from the Minister that the passenger volume at Changi Airport is about 59 million a year. In contrast, the P2P platform serves more than 180 million passengers a year – about three times compared to passenger volume in Changi Airport. Thus, will MOT consider designating such platform providers as the designated entities?

Lastly, within large organisations, essential transport services and specific capabilities may reside within specific divisions or departments of the large organisations. How would MOT validate their capabilities and readiness to provide such services in both peacetime and crisis? Would MOT consider mandating this entities as separate companies for better streamlined regulation and administration?

These questions and suggestions are raised to ensure the efficacy and comprehensiveness of the Transport Sector (Critical Firms) Bill. As we navigate the intricate terrain of our transport landscape, let us remain vigilant and proactive in safeguarding the interests of our nation. Therefore, I eagerly await the Minister's response to address the above five points.

Mr Speaker, Sir, notwithstanding the above clarifications and questions, I stand in support of the Bill.

Mr Don Wee.

Mr Speaker, Sir, I agree with the Ministry that the Transport Sector (Critical Firms) Bill is necessary for the strengthening of regulatory oversight for our air, sea and land transport sectors. Doing so will ensure that the sectors will operate under conditions to better support and enhance our national security interests.

Many other countries, such as the US, the UK, Australia and most members of the EU, have similar legislations, including provisions regarding the designation of critical entities, ownership and operational controls, management appointment approvals, as well as remedial directions.

Nonetheless, I would like to ask if there was any recent incident in Singapore that have prompted the introduction of this new legislation? Would the Ministry share the specific risk or vulnerability that is being addressed by this Bill?

Under the designated entities regime, the key entities are the ones involved in the provision of essential transport services in Singapore. Would the Minister elaborate on the criteria to be used to determine which entities qualify as "essential" and the implications of this designation?

As a small country with an open economy, for decades, we have been welcoming investments in many sectors from foreign companies. I would like to ask the Minister how the increased regulatory oversight would affect this sector's viability, performance, competitiveness, and attractiveness to both local and international investors. I am concerned about the potential dampening effect on collaboration, innovation and new investments. Mr Speaker, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] During this period of greater international tensions between some nations, particularly between the US and China, how will the MOT manage potential sensitivities and conflicts of interest among designated equity interest holders, especially for the air and sea sectors?

The Ministry intends for this Bill to complement the Significant Investments Review Act (Sira) which scrutinises local and foreign investments in entities considered critical to our national security interests. Entities designated under this Bill will not be concurrently designated under Sira. Would the Minister elaborate on how these two pieces of legislation work together to avoid areas of overlap or potential conflicts?

My final question is regarding the Ministry's consultation with industry representatives on this Bill. Would the Ministry share with the House their concerns and feedback, particularly on its potential impact on businesses and investors, and how these are addressed in the Bill?

(In English): I would like to conclude with my support for the Bill.

Minister Chee.

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

Sir, to Mr Don Wee and Mr Dennis Tan's questions on whether there are risks in the prospective designated entities or recent incidents that have prompted the introduction of this Bill, I would like to clarify that the introduction of this Bill is not to address existing risks or current problems. It is to put in place safeguards to protect critical transport firms from extreme scenarios in future and ensure the continued resilience of essential transport services in Singapore.

Mr Saktiandi, Mr Wee and Mr Louis Ng asked about the potential overlap between this Bill and SIRA. SIRA is designed to complement sectoral legislation and safeguards. Where possible, the preference is for sector leads to enforce controls over the entities under their purview, as they are most familiar with their sectors.

To avoid duplication, we do not intend for entities adequately regulated under sectoral legislation, including critical transport firms covered under MOT’s sectoral Acts, to be designated under SIRA.

Mr Wee and Mr Saktiandi asked about the criteria for designation and Mr Ng asked about the number of designated entities under the Bill. Sir, as we plan to cover only essential transport services under the Bill, we expect to designate a small number of firms for each sector. There are various criteria that will be taken into consideration for designation, including whether the entity is involved in the provision of essential transport services, and whether it is strategically important in the sector.

An entity may be considered strategically important if it has significant market share or specialised expertise in the industry. Designated entities are thus unlikely to be smaller companies with lower market share in the industry. Designated entities may include firms owned by the Government or Temasek Holdings, they could also include firms owned by other shareholders.

Mr Saktiandi and Mr Ang Wei Neng asked whether we will consider designating P2P operators under the Bill. Sir, we have no plans to do so at this juncture, as the P2P sector is still evolving. It serves a complementary role to public transport to meet the commuting needs of Singaporeans. We have an on-going review of the P2P industry structure and regulatory framework, and a decision can be taken after the review is completed.

Mr Dennis Tan asked whether Seletar Airport will be covered under the Bill. We have not included Seletar Airport in the definition of essential transport services in the Bill, as it currently functions as a secondary airport to Changi Airport.

The respective authorities will review the list of designated entities from time to time. They will engage and consult the entities prior to designation, and the notifications of designation will be published in the Gazette at least 14 days before the date that the designation takes effect.

Mr Ang asked whether equity interest holders that are predominant owners of a designated operating entity will be required to seek approval for Chairpersons and CEOs. As mentioned in my opening speech, we may designate equity interest holders that have a strong nexus of control over the designated operating entity. If designated, these equity interest holders will also need to seek approval for appointment of their Chairpersons and CEOs, to protect the interests of Singapore and Singaporeans.

Mr Ang asked if we will mandate larger entities to restructure and register specific departments that manage essential transport services as separate entities. Sir, this is a commercial decision for the companies to make. The Bill does not impose such requirements.

Mr Saktiandi, Mr Wee and Mr Ng asked for more details on our consultation with entities on the Bill. We have engaged key transport firms on the Bill and the relevant authorities will finalise the list of designated entities after the Act comes into force. The initial list of entities will be designated by the end of this year. If the relevant Authorities have not engaged your company on this Bill so far, it means there are currently no plans to include it as a designated entity.

We have taken onboard the feedback from the engagements. For example, some firms asked for more clarification on the "materiality" threshold for notification. We will prepare guidelines, as I mentioned earlier, to provide greater clarity on the types of events that would require notification.

Mr Yip Hon Weng, Mr Wee, Mr Ng, Mr Tan and Ms Poh Li San asked if the Bill's controls could affect the economic competitiveness, innovation or growth of the transport industry, as they felt they might disadvantage foreign companies, discourage new investments, or increase barriers for new enterprises.

Sir, let me assure Members that the Bill will not have these downsides. The proposed Bill is about enhancing the resilience of essential transport services in Singapore, by safeguarding strategically important transport firms against adverse influence. It will not adversely impact the transport industry or create significant compliance costs and regulatory burden for entities. Neither will it affect the day-to-day operations of the transport firms.

Many of the controls under the Bill are not new and already exist in our sectoral Acts or licence conditions today. What this Bill seeks to do is to consolidate some of these existing controls under a common legislative framework and extend it to other entities, including some non-licensees. The existing licensing regimes remain in effect and will continue to regulate standards and performance of the day-to-day operations of our licensed entities to ensure that they continue to operate their services in a safe, reliable and efficient manner.

Mr Saktiandi asked how the requirements under our Bill would be deconflicted with overlapping requirements in shareholders’ agreements or the law in the home jurisdiction of foreign-owned entities.

Sir, just like today, such an entity would have to comply with two sets of requirements, one in their home jurisdiction and another in Singapore. Shareholders can continue to appoint Board members as provided for in their agreements, but the relevant appointments will require approval from the Authorities. Each decision for approval will be reviewed on a case-by-case basis. The Authorities will assess the circumstances of each case and try to process the applications as quickly as possible.

We have also carefully calibrated the controls to impose only what is necessary to achieve our policy objective of safeguarding the provision of essential transport services in Singapore, while ensuring that our transport industry remains open, pro-business and investor-friendly.

One example is how we differentiated the controls for designated operating entities and designated equity interest holders. As designated equity interest holders are not direct providers of essential transport services, they will be subject to less onerous requirements than designated operating entities.

Designated equity interest holders will not be subject, for example, to a Special Administration Order, and will only need to seek approval for Chairperson and CEO but not the rest of their Board directors.

Ms Poh asked about the criteria for assessing changes in ownership and the appointment of key personnel in designated entities. We will consider a range of factors before coming to a decision, but the main focus is to protect Singapore's national interests and to safeguard our critical transport firms against adverse influence.

We will not assess applications based on nationality alone and we are not reserving appointments for any particular nationality or group of persons.

Mr Tan also asked whether the Government will be publishing guidelines on what a "fit and proper" person is, as this is one of the approval criteria for ownership controls. Sir, this criterion is also found in SIRA and some sectoral legislation. Our approach will take reference from these legislation as far as possible, while taking into account the needs of the respective transport sectors.

Ms Poh asked whether ownership controls would apply to the non-transport related business arms of designated entities. While our main focus is with parts of the business related to the provision of essential transport services, the controls will have to be applied at the entity level. So, it depends on how the entities structure their business operations.

This Bill does not interfere with the day-to-day operations or private commercial decisions of the critical transport firms. It is to protect Singapore and Singaporeans against potential threats to the safety and reliability of our essential transport services. In such scenarios, MOT could use the proposed safeguards in this Bill to prevent undesirable individuals from being appointed to key positions in these firms, or to disallow certain persons from acquiring significant shareholdings.

In response to Mr Yip's question about the possible time delays associated with approvals, the relevant authorities will endeavour to minimise undue delays. For bona fide applications, the firms should have nothing to worry about, as the applications will be given expeditiously. For problematic cases, I think Mr Yip would agree that it is not in Singapore’s interests for the authorities to give quick approvals in such situations.

In response to Mr Saktiandi's question, the relevant authorities will monitor ownership changes in designated entities, but it is ultimately the responsibility of those becoming or ceasing to become controllers of a designated entity to ensure that prior approval is obtained or prior notice is given, where applicable. There may be remedial directions and penalties if they fail to do so.

Mr Dennis Tan, Mr Yip Hon Weng, Ms Poh Li San and Mr Ang Wei Neng asked about the triggers and implementation process for the Special Administration Order. There are questions on when such orders would be issued on the “public interest” grounds, and what this might entail. Sir, this is not a new concept and can be found in MOT’s existing laws, as well as legislation in other sectors.

"Public interest" considerations will evolve over time. Keeping the scope broad will provide us with sufficient flexibility to respond quickly to new risks that may emerge over time, or unexpected scenarios in future. I would like to assure Members that we will be judicious in exercising these powers. The order will only be activated as a last resort and in the extreme scenario and unlikely event that a designated entity becomes unable to provide essential transport services safely and reliably. This is similar to the step-in arrangements for critical firms in other sectors, such as power and water.

When an order is issued, the Minister will appoint a person, who may be the respective authorities, operators or other third parties with the requisite competencies, to manage the affairs, business and property of the designated entity. The main objective is to ensure that the entity can continue to provide the essential services and I think it is in such situations, a safe assumption to make, that many of the employees of the entity will still be there, working there, and so we will also be working together with the employees who are there, who are familiar with the operations. But the key, as I said, is to ensure that the entity can continue to provide the essential services.

Mr Saktiandi asked why the penalties for non-compliance differ across the four Acts and whether the penalties are sufficient to incentivise compliance. In deciding the penalties under this Bill, we took reference from existing penalties under the framework of each of our sectoral Acts, and the different considerations and needs of entities across the transport sectors. The existing penalties have worked well so far in deterring errant behaviour, without imposing excessive burden on bona fide firms.

Mr Yip Hong Weng asked about the safeguards in place to ensure transparency, as well as the appeal process under the Bill. Sir, any aggrieved party may appeal to the Minister against certain decisions made by the authorities, including the designation of an entity, refusal to grant approvals required for controls over ownership or management appointments and the issuance of remedial directions.

There is no appeal provision for the Special Administration Order under our existing Acts, as prompt action is required in such situations to respond quickly and safeguard the continuity of essential transport services. So, I hope Members understand why, for Special Administration Order, this is a separate process. This is also similar to the approach taken in other sectoral legislation. Step-in powers are a measure of last resort and, hence, before these powers are activated, it is likely that the authorities would already be in conversations with the entity to explore different ways to improve the situation.

Mr Speaker, we must continue to safeguard Singapore’s transport connectivity to protect the interests of Singapore and Singaporeans. This Bill will strengthen the resilience of our transport sectors in an increasingly complex operating landscape. I agree with Members that it is important to assure investors and businesses, both local businesses and international businesses, that our doors remain open and that our system continues to be transparent and fair. The proposed Bill does not change our long-standing position on this.

We have, therefore, calibrated our controls to only what is necessary to enhance the resilience of our essential transport services and ensure that the requirements are not overly onerous to the companies and investors. The Bill does not interfere with the day-to-day operations of the entities or their commercial decisions, and bona fide approvals will be processed expeditiously. All powers under the Bill will be exercised judiciously and in accordance with clearly defined procedures.

I thank Members for supporting this Bill to strengthen the resilience of our transport sectors and to protect the interests of Singapore and Singaporeans. Sir, I beg to move.

Mr Ang Wei Neng.

Mr Speaker, I thank the Minister for Transport for the comprehensive replies to our queries. Can I just clarify with the Minister that he said that the Chairman and the CEO of the designated equity interest holder need approval by MOT? If so, does it mean that a foreign company, which is a holding company that majority owns a designated operating entity in Singapore, needs approval from MOT, even if the foreign company is a listed company in their home country? That means if they are listed and not in Singapore, they also require their Chairman and their group CEO to be approved by MOT?

Mr Speaker, if the designated equity holder is designated, then yes, under our laws, the Chairman and the CEO appointments would require approval from the relevant authorities, not MOT. The relevant authorities.

Mr Dennis Tan.

I would like to thank the Minister for the clarifications that he has provided. I am not sure the Minister has answered some of my questions. I will just ask them again.

Regarding my question, in a situation where there is no replacement operator willing to take over at short notice under Part 4, section 27DE, I asked whether LTA would be in a position to take over the operation. Currently, what is the position, whether they are able to do so or whether there is an actionable plan or roadmap towards such an outcome?

Also, followed by that, I did ask the Minister whether, since some of these Class 1 bus licensees and other companies, SMRT, PSA Corp are owned by Temasek, and CAG is owned by the Government, are there some redundancies in any way arising from this Bill and whether or not there are any plans for divestment of the Government's stakes?

Mr Speaker, I think I have answered both questions actually in my response speech. I mentioned that the coverage includes companies that may be owned by Government, Temasek Holdings, but also other entities that may have other shareholders.

As to whether this then leads to the point that Mr Tan is making, I think probably a little bit of extrapolation on Mr Tan's part. This Bill, by itself, does not go anywhere near those further points that Mr Tan is making. It is just to provide the safeguards for our critical transport firms and our essential transport services.

For the first question that Mr Tan asked, certainly, we would, as part of the preparations for an extreme scenario like this, have to look at where are the capabilities that we need to build up, not just within LTA, but also within the industry ecosystem as a whole. Because as I mentioned in my response speech earlier, this cannot be done just by LTA alone. We will also have to work closely with, first and foremost, the employees and the staff who are working in the entity who know the operations best. Many of them will still be there, even if the entity were to run into trouble and we need to issue, in an extreme scenario, a Special Administration Order. We will have to work closely with them.

So, we will need support from the staff, the unions, and also for some of the sectors where there is more than one operator, the expertise from the other operators could also come in to help us. So, this is not just an LTA alone effort. This is a whole ecosystem effort. But certainly, we will need to make preparations and we will need to get ready to deal with all these different scenarios so that we are well prepared.

Ms Poh Li San.

Speaker, I thank Minister Chee for his comprehensive reply. Minister Chee assured us that only as a last resort in extreme scenarios will the step-in powers be exercised.

Given the scale and complexity of our transportation system, how likely is MOT or the agencies able to find replacement leadership with the right capabilities at short notice to lead the designated entities out of trouble, especially since this industry only has a few big players? For example, SMRT, we know, took quite a few years with all hands on deck to get back to where they were. So, I would like the Minister to further clarify this part.

Mr Speaker, this is where perhaps I could borrow a phrase from the healthcare sector. Prevention is better than cure. So, a lot of the things that we do before that extreme scenario happens is to really help us to mitigate the risks to prevent those risks from turning into an extreme scenario so that we can avoid going to this last resort, if possible.

But we still need to be ready in case those risks were to emerge, those extreme scenarios were to happen in future. We do not want to be caught unprepared. So, that is why we wanted to have this Bill, to be future-ready. But as I clarified earlier, the approach that we want to take is actually to work in close collaboration with our tripartite partners.

So, using SMRT as a good example, SMRT's reliability challenges were fixed and maintenance was improved, reliability improved, performance improved, not through the issuance of a Special Administration Order, but through the close collaborations among LTA, SMRT and NTWU, our union, working together, fixing the problems and it remains a continuous work in progress. So, that is still the preferred approach. We will use the Special Administration Order as a last resort. If we really need to do that, yes, it is there, but we would prefer not to go down that path. We would prefer to use prevention rather than cure.

Mr Saktiandi.

I would like to seek a clarification from the Minister. I am not sure whether I missed part of his closing speech. I actually asked a question about OSIR in connection with SIRA, which serves as a dedicated one-stop touchpoint to engage all stakeholders and address their concerns and minimise the impact on them. But for this Bill, it is very sectoral based. Will MOT actually utilise OSIR to handle stakeholder questions or concerns going forward or will there be a separate sectoral-based entity?

Mr Speaker, the office is set up for SIRA because SIRA is a broad-based legislation covering across the economy, different sectors. In our case, because we have the sectoral authorities – CAAS, LTA, MPA – they will be the ones who will play the role of this office to deal with the respective firms within their sector.

Any other clarifications for the Minister? No?

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House resolved itself into a Committee on the Bill. – [Mr Chee Hong Tat].

Bill considered in Committee.

[Mr Speaker in the Chair]

Clauses 1 to 18 ordered to stand part of the Bill.

Clause 19 –

Clause 19. Minister for Transport.

Mr Speaker, I beg to move the amendment* to Clause 19 standing in my name, as indicated in the Order Paper Supplement. The reason for the amendment has been explained in my Second Reading speech.

*The amendment read as follows:

In page 64, line 27: to leave out "(i)" and insert "(i)".

Amendment agreed to.

Clause 19, as amended, ordered to stand part of the Bill.

Clauses 20 to 38 ordered to stand part of the Bill.

Clause 39. Minister for Transport.

Mr Speaker, I beg to move that in page 135, to leave out lines 3 to 13*. The reason for the amendment has been explained in my Second Reading speech.

*The amendment read as follows:

In page 135: to leave out lines 3 to 13.

Amendment agreed to.

Clause 39, as amended, ordered to stand part of the Bill.

The consequential amendments* to be made, will be made.

*Consequential amendments:

In page 135, line 4: to renumber sub-clause (4) as sub-clause (3).

Clauses 40 to 61 ordered to stand part of the Bill.

Bill reported with amendments; read a Third time and passed.