Singapore Business Federation to Represent Singapore's Business Interests

This article provides a summary of the purpose of the Singapore Business Federation Act (A40/2001) and highlights some of the key discussion points from Parliamentary Debates.

The Singapore Business Federation Act (A40/2001) ('the Act') was passed by Parliament on 5 October 2001. The Act provides for the membership of certain local and foreign companies in Singapore in the Singapore Business Federation ('SBF') and regulates certain aspects of the management of the SBF. The Act came into operation on 1 April 2002.

The Genesis and Role of the SBF
The Singapore Federation of Chambers of Commerce and Industry ('SFCCI') was set up in 1978 to represent local business interests and employer groups. The membership of the SFCCI comprises the three ethnic chambers, the Singapore Confederation of Industries and the Singapore International Chamber of Commerce. The SFCCI has been effective in representing the local business interests at local and regional forums, such as the Asian Chambers of Commerce and Industry and the International Chamber of Commerce.

In recent times, however, globalisation and the rapid pace of technological progress have challenged our relatively small local companies. Representation of the local business community in forums, like ASEAN, APEC and other bilateral business councils and at bilateral free-trade negotiations, can also be improved. These developments have generated a need for the local business community to form a stronger collective voice.

In 1998, Prime Minister Goh Chok Tong challenged the SFCCI to come up with a plan for it to play an enhanced role in Singapore. The SFCCI's response was to propose the formation of the SBF. The government supported this proposal, and the Minister for Trade and Industry ('the Minister') tasked the Chairman of the Singapore National Employers Federation to head a pro tem Committee of the SBF ('Pro Tem Committee') to make recommendations on the workings of the SBF.

SFCCI was dissolved in March 2002 and the SBF is the new apex organisation representing Singapore's business interests both locally and abroad. The SBF's role is to enhance the organisation of the business community in Singapore and represent and promote, in Singapore and overseas, the major business concerns of the larger business entities in Singapore. The concerns of these entities would include investment and trade opportunities and labour management issues.

Main Features of the Bill
Council
The Pro Tem Committee has proposed that the Council of the SBF ('the Council') consist of 20 seats. Apart from the following restrictions, the Act provides that the constitution of the SBF will stipulate the composition of the Council, that is:

• each of the three ethnic chambers must have one nominee in the Council; and
  the number of representatives from foreign chambers must not exceed one quarter of the total number of members in the Council.

Other organisations like the various local chambers, business associations and professional organisations will be allocated seats based on criteria such as their membership base and the relative importance of particular sectors in our economy. A few seats will also be allocated to representatives who are directly elected by member companies, which are not represented through chambers. In addition to the 20 seats, the Council will co-opt up to six members.

Membership and subscription
Membership for the following business entities is compulsory:

o every local company with a paid-up share capital of S$500,000 and above; and
o every foreign company with an authorised share capital of S$500,000 and above.

The Act provides, however, that the Minister may exempt any local or foreign company or any class of local or foreign companies from being a member.

Membership is voluntary for companies whose paid-up share capital (in the case of local companies) or authorised share capital (in the case of foreign companies) falls below the stipulated threshold levels. Alternatively, these companies may choose to have their needs served through membership with an industry association or through one of the ethnic chambers.

The Act provides that subscription fees will not exceed S$1,500 per year. The fees will be determined by the Council after consultation with the Board of Trustees of the SBF ('the Board') and must be approved by the Minister. The Act further provides that the fee structure may prescribe different rates of subscription fees for different classes of members.

The fee structure that has been proposed by the Pro Tem Committee provides for annual subscription rates ranging from S$300 to S$800. These subscription rates will generate approximately S$6m a year. The Council may recover unpaid subscriptions from members through the Small Claims Tribunal.

Board of Trustees
The Minister will appoint the trustees of the Board. Its role is to ensure that the SBF acts in furtherance of its objects, that the funds and assets of the SBF are properly accounted for and that the Council members are fit and proper to hold office. The Board will have, among other powers, full access to the records relating to the financial transactions of the SBF and the power to require any person to disclose to the Board any information which it considers necessary for ascertaining whether the funds of the SBF have been properly applied or for the proper discharge of the Board's functions.

Dissolution of the SBF
The SBF may not be dissolved without the approval of the Minister. Should the SBF be dissolved, the manner in which the property of the SBF is disposed of must be determined by the members of the SBF and approved by the Board.

Conclusion
Rather than allow our businesses to stagnate and become increasingly uncompetitive in the international market place in the face of globalisation, the government has decided to meet these challenges through the introduction of measures such as the formation of the SBF. The SBF will be expected to play an important role in representing and uniting the business community by serving as a facility for information exchange and for promoting dialogue with the government as well as foreign governments. It should also advance the interests of Singapore businesses overseas and establish links with Singapore business associations that are located in other countries. To facilitate the SBF carrying out these important roles, the government has put into place appropriate mechanisms for the management of the SBF and the safeguarding of its assets.

Foo E Lin
Rajah & Tann
E-mail: [email protected]