Big word, big impact

  • Business
  • Saturday, 09 Aug 2014

SOME of us may be put off by big words, but here’s one we in this region can no longer ignore – extraterritorial. In particular, plantation companies in Singapore, Malaysia and Indonesia should take note.

This is because the Singapore Parliament passed the Transboundary Haze Pollution Bill on Tuesday.

A law of a country is extraterritorial when it covers actions outside the country. Prime examples are the United States’ Foreign Corrupt Practices Act and Britain’s Bribery Act.

The former prohibits American individuals and businesses from making payments to foreign government officials to assist in obtaining or retaining business, while under the Bribery Act, a person who bribes a foreign public official is guilty of an offence if there’s an intention to influence the official.

The Singapore Bill will become the Transboundary Haze Pollution Act, which will contain a provision that says the Act shall extend to “any conduct or thing outside Singapore which causes or contributes to any haze pollution in Singapore”.

This is an extraterritorial application of the Act. That has been the aim from the start. After all, the land and forests fires that trigger South-East Asia’s recurring haze episodes don’t rage in Singapore. They happen mostly in Borneo and Sumatra, and to a much lesser extent, in Peninsular Malaysia.

When its neighbours complain about the failure to halt the agriculture-related burning, Indonesia has often blamed land clearing linked to plantation companies controlled by Malaysian and Singaporean businesses.

In July last year, Singapore Law Minister K. Shanmugam was asked in Parliament whether the Government would consider coming up with legislation with extraterritorial jurisdiction so that it could act against those whose overseas business activities had hurt Singapore environmentally and economically.

It was a reference to the haze problem. The Minister said he had asked the Attorney-General to study the possibility of introducing such legislation.

“I have also asked him to consider what legal options are available, if credible and usable evidence is received that Singapore-linked companies are involved. The primary responsibility for taking action against those companies, of course still lies with Indonesia,” he added.

About a year later, his Cabinet colleague, Environment and Water Resources Minister Dr Vivian Balakrishnan, was given the job of delivering a speech for the second reading of the Transboundary Haze Pollution Bill.

He acknowledged that the countries in which forests were being burnt had their own laws but enforcement on the ground was inadequate. Singapore, he said, couldn’t simply wait and wishfully hoped that the problem would be resolved on its own.

“The Singapore Government, and I hope this House, will want to send a strong signal that we will not tolerate the actions of errant companies that harm our environment and put at risk the health of our citizens,” he added in the speech on Monday.

At the same time, he conceded that implementing the Act would be challenging and warned against expecting that there would soon be an overwhelming number of prosecutions against companies once the Act comes into force.

He pointed out that the new legislation was not meant to replace the enforcement actions that should be taken by other countries but rather to complement their investigative and enforcement efforts.

“While the legislation is a step in the right direction, it is not a silver bullet. It is only one of a slate of measures that we must put in place in order to tackle the transboundary haze that has plagued our region for many years,” he said.

“I strongly believe that regional cooperation within Asean is still a critical pillar of the ultimate solution. Enacting this legislation is just one step to re-align commercial interests.”

This is a realistic assessment. The Act alone can do very little to end our hazy days. But it may well be a catalyst for a mindset change within the business community and society at large.

Businesses are accustomed to operating in geographical compartments. A company with a presence in Country A is subject only to the laws of the land; it doesn’t have to worry about complying with Country B’s legislation if it has no operations there.

In fact, companies have been known to relocate or to set up foreign subsidiaries to capitalise on laws that are more flexible or relaxed than those back home.

However, in a globalised world, compartmentalisation doesn’t hold up so well anymore.

As the region’s annual haze problem shows, what you do in one place often has an impact somewhere else. Sometimes, the chickens come home to roost.

Cast this against the backdrop of the rising importance of sustainability issues, and it’s clear that a business will struggle to gain consumer and investor support if any part of its organisation or its supply chain falls short of integrity, social and environmental standards.

The passage of the Transboundary Haze Pollution Bill should be regarded as an affirmation that businesses should no longer conduct themselves differently when operating in different jurisdictions. They should be at their best wherever they are.

  • Executive editor Errol Oh can’t wait to see who will be the first to be targeted under the new Singapore law.

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Business , hza , singapore , law


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