Bill to extend control over key transport firms passed amid concerns it could hinder growth
Questions had been raised over whether the Bill would disadvantage foreign companies and discourage new investments.
ST PHOTO: KUA CHEE SIONG
Kok Yufeng
Transport Correspondent
MAY 08, 2024,
SINGAPORE – Amendments to existing transport laws that will subject key Singapore companies to greater regulatory scrutiny will not have an adverse impact on the industry, said Transport Minister Chee Hong Tat.
This is because they will neither create significant compliance costs nor interfere with private commercial decisions and day-to-day operations, he told Parliament on May 8.
Allaying fears among lawmakers that the Transport Sector (Critical Firms) Bill could affect growth and innovation, Mr Chee said it sets the foundations for Singapore to guard against possible disruptions to a small number of companies that run key services here.
Questions had been raised over whether the Bill, which was passed by Parliament, would disadvantage foreign companies and discourage new investments.
Mr Chee said the Bill will prepare Singapore for extreme scenarios in the future, noting that it is not meant to address existing risks or current problems.
“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,” he added.
Four existing laws will be amended: the Bus Services Industry Act, the Rapid Transit Systems Act, the Civil Aviation Authority of Singapore Act, and the Maritime and Port Authority of Singapore Act.
With this, the respective transport authorities – the Land Transport Authority, Civil Aviation Authority of Singapore and Maritime and Port Authority of Singapore – will be able to classify key companies under their purview as designated entities and subject them to more stringent controls.
These firms could either be those that provide essential transport services directly in Singapore or those that hold an equity interest in a key transport company here.
The essential services covered include public bus and rail services, passenger and cargo air services at Changi Airport, as well as port and maritime services such as bunkering.
Mr Chee said only strategically important companies that provide services that are not readily replaceable – due to significant market share or specialised expertise, for example – will be designated.
Companies that will be designated as key transport entities would already have been engaged by the relevant authorities.
The legal amendments are set to take effect in the second half of 2024, with the initial list of designated entities to be drawn up by the end of the year. This list will be reviewed from time to time.
Designated firms will be required to notify or seek approval from the relevant authority if there are major changes to their ownership or leadership.
The firms must also keep the authorities informed of events that could materially impair the provision of essential transport services, such as a lawsuit or an insolvency.
Mr Chee said many of these controls are not new, and already exist in existing laws or transport licencing 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,” he added.
Additionally, under the amendments, existing powers that allow the transport minister to step in during extreme cases will be extended to cover a wider range of companies.
Seven MPs had raised a range of concerns, including over a lack of clarity over specific criteria, procedures and timelines; a possible reduction in competition; and whether red tape would hinder the sector’s ability to attract leadership talent.
Addressing questions on the extension of the transport minister’s step-in powers, Mr Chee said this will be exercised only as a last resort, and it is likely that the authorities would already be in discussions with the affected firm to find ways to improve the situation before these powers are activated.
Should the power be invoked, the minister will appoint those with the requisite competencies to manage the designated entity, he added.
Ms Poh Li San (Sembawang GRC), who works for airport operator Changi Airport Group, said the barriers to entering the transport sector here are already high, and it is harder for Singapore to attract major foreign players as the domestic market is small.
“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,” she added.
“The lack of competitors in any industry will result in a lack of efficient operations in the long run, and it’s natural that the service standards will decline.”
Mr Yip Hon Weng (Yio Chu Kang) noted that the approval process for acquiring and liquidating shares of key transport firms under the Bill will have potential implications on stock trading.
He said the potential delays associated with approvals could hinder stock exchange activities and impact profitability or lead to financial losses.
Kok Yufeng
Transport Correspondent
MAY 08, 2024,
SINGAPORE – Amendments to existing transport laws that will subject key Singapore companies to greater regulatory scrutiny will not have an adverse impact on the industry, said Transport Minister Chee Hong Tat.
This is because they will neither create significant compliance costs nor interfere with private commercial decisions and day-to-day operations, he told Parliament on May 8.
Allaying fears among lawmakers that the Transport Sector (Critical Firms) Bill could affect growth and innovation, Mr Chee said it sets the foundations for Singapore to guard against possible disruptions to a small number of companies that run key services here.
Questions had been raised over whether the Bill, which was passed by Parliament, would disadvantage foreign companies and discourage new investments.
Mr Chee said the Bill will prepare Singapore for extreme scenarios in the future, noting that it is not meant to address existing risks or current problems.
“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,” he added.
Four existing laws will be amended: the Bus Services Industry Act, the Rapid Transit Systems Act, the Civil Aviation Authority of Singapore Act, and the Maritime and Port Authority of Singapore Act.
With this, the respective transport authorities – the Land Transport Authority, Civil Aviation Authority of Singapore and Maritime and Port Authority of Singapore – will be able to classify key companies under their purview as designated entities and subject them to more stringent controls.
These firms could either be those that provide essential transport services directly in Singapore or those that hold an equity interest in a key transport company here.
The essential services covered include public bus and rail services, passenger and cargo air services at Changi Airport, as well as port and maritime services such as bunkering.
Mr Chee said only strategically important companies that provide services that are not readily replaceable – due to significant market share or specialised expertise, for example – will be designated.
Companies that will be designated as key transport entities would already have been engaged by the relevant authorities.
The legal amendments are set to take effect in the second half of 2024, with the initial list of designated entities to be drawn up by the end of the year. This list will be reviewed from time to time.
Designated firms will be required to notify or seek approval from the relevant authority if there are major changes to their ownership or leadership.
The firms must also keep the authorities informed of events that could materially impair the provision of essential transport services, such as a lawsuit or an insolvency.
Mr Chee said many of these controls are not new, and already exist in existing laws or transport licencing 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,” he added.
Additionally, under the amendments, existing powers that allow the transport minister to step in during extreme cases will be extended to cover a wider range of companies.
Seven MPs had raised a range of concerns, including over a lack of clarity over specific criteria, procedures and timelines; a possible reduction in competition; and whether red tape would hinder the sector’s ability to attract leadership talent.
Addressing questions on the extension of the transport minister’s step-in powers, Mr Chee said this will be exercised only as a last resort, and it is likely that the authorities would already be in discussions with the affected firm to find ways to improve the situation before these powers are activated.
Should the power be invoked, the minister will appoint those with the requisite competencies to manage the designated entity, he added.
Ms Poh Li San (Sembawang GRC), who works for airport operator Changi Airport Group, said the barriers to entering the transport sector here are already high, and it is harder for Singapore to attract major foreign players as the domestic market is small.
“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,” she added.
“The lack of competitors in any industry will result in a lack of efficient operations in the long run, and it’s natural that the service standards will decline.”
Mr Yip Hon Weng (Yio Chu Kang) noted that the approval process for acquiring and liquidating shares of key transport firms under the Bill will have potential implications on stock trading.
He said the potential delays associated with approvals could hinder stock exchange activities and impact profitability or lead to financial losses.
Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) asked why the new regulatory regime was necessary, given that it closely mirrors the Significant Investments Review Act (Sira), which already allows Singapore to screen major investments in entities critical to national security interests.
“My primary concern with duplicative or overlapping regimes is the potential confusion that businesses and investors would face. Having multiple, different regulatory regimes will drive up investment and compliance costs,” he said.
In response, Mr Chee said a sector-specific approach allows the authorities to customise the regulatory oversight needed. To avoid duplication, entities adequately regulated under sector-specific laws will not be designated under Sira.
The authorities will also work to minimise any undue delays in approvals, he added. “For bona fide applications, the firms should have nothing to worry about.”
Mr Chee said the Transport Ministry has been engaging key entities since 2023 to better understand how the new regulations can be rolled out practically.
To ensure that the requirements are not overly onerous, the regulatory controls have been calibrated so that only what is necessary is imposed, he added.
A set of guidelines will be issued after the new law takes effect. This will provide companies with practical advice on how to comply with the various requirements.
Mr Ang Wei Neng (West Coast GRC), who heads taxi operator Strides Premier, asked whether the Bill would cover taxi and ride-hailing firms. Mr Chee said there are no plans for this as the industry is still evolving.
Seletar Airport is also not covered under the new Bill, as it functions as a secondary airport.
Rounding up the debate, Mr Chee said the Bill will strengthen the resilience of Singapore’s transport sectors in an increasingly complex operating landscape.
He added: “I agree with members that it is important to assure investors and businesses, both local and international, that our doors remain open and that our system continues to be transparent... The proposed Bill does not change our long-standing position on this.”
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