FICA could affect perceptions of Singapore as global hub

Concerns raised about Foreign Interference (Countermeasures) Act's broad definitions and limits on judicial review

Oct 01, 2021

AHEAD of next week's Parliamentary debate on the Foreign Interference (Countermeasures) Bill, much discussion has been sparked. Concerns about its broad definitions and restrictions on judicial review have been raised by legal practitioners, civil society activists, and the Workers' Party, whose Members of Parliament have proposed amendments.

Apart from these key legal issues, one might ask if a Bill that targets even "collaboration" with a "foreign principal" has implications for multinational corporations - and Singapore's role as a global hub.

If it becomes law, the Foreign Interference (Countermeasures) Act (FICA) will chiefly address foreign interference via electronic communications, and impose obligations on "politically significant persons".

FICA "is unlikely to directly affect MNC activity and business deals" as few of these are linked to politics, said The Economist Intelligence Unit (EIU) Asia country analyst Yu Liuqing, though noting that social media service providers and online publishing businesses will face compliance risks.

Similarly, TSMP Law Corporation joint managing partner Stefanie Yuen Thio said: "I don't think corporates will worry about business being disrupted or curtailed, except Internet service providers and social media platforms, who could be the recipient of a directive under FICA."

But Eugene Thuraisingam LLP partner Suang Wijaya notes several situations where MNCs might need legal advice on how FICA affects them.

Take, for instance, the hypothetical example of an international pharmaceutical firm which works with or funds a Singapore-based academic for research on a drug - due to be submitted for Ministry of Health approval - and publishes the findings.

"Would the collaboration or funding activity be considered to be activity that 'influence(s) or seek(s) to influence Singapore governmental decision' under Section 8(c) of FICA?"

Another question is: If an MNC's employee is vocal about Singapore politics or policy, what is the risk of them being suspected of undertaking activity "on behalf of" the MNC?

Firms' environmental, social and governance (ESG) efforts may also be affected. He gave the example of an MNC which publicly commits not to discriminate on the basis of, among other things, sexual orientation.

While there are good reasons to be worried about hostile foreign interference, the concern "for the business world and Singapore's position as an international hub is the perception that the Act could be used to stamp out dissent", said Ms Yuen Thio.

"Even as we try to encourage more MNCs and foreign corporates to base their overseas headquarters here, they will want to feel that they can be good corporate citizens in such an important business hub," she added.

Granted, FICA in itself may not change MNCs' calculations drastically. Given its established strengths, Singapore is still a prime choice for regional headquarters, said Mr Yu.

"Competitor cities like Hong Kong also grapple with more government controls and controversial legislation that might drastically change the business environment," he added.

Yet FICA may nonetheless erode Singapore's standing. "The bigger issue is whether foreign companies feel that Singapore continues to be an open and welcoming place to do business," said Ms Yuen Thio.

Strict border curbs amid Covid-19 and discourse about foreigners "taking jobs from locals" have already led to expatriates feeling less welcome, she said. "If FICA is seen as another line drawn in the sand, where foreigners' views and collaborations are less welcome, that may affect the business world's perception of whether Singapore is an open and global city."

"It may be premature now to speculate on whether and the extent to which FICA may affect Singapore's attractiveness to foreign companies," said Mr Wijaya.

But uncertainty on its interpretation may be a factor in MNCs' decisions about how much business activity to undertake here, he added.

In the common law system, the courts normally play a crucial role in explaining how laws should be understood. But FICA "is designed such that there will be little opportunity for the courts to interpret and define the scope of its provisions", he noted.

Ms Yuen Thio said it "would be extremely helpful for the Minister to share in Parliament about the types of scenarios and behaviours that FICA, if passed, is intended to catch".

Some critics, while recognising the importance of FICA's aims, have called for scrutiny and amendments to its scope. If this is not possible, more clarity about its application may at least help to assuage MNCs' concerns - though it may do little to change overall perceptions of FICA.