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Photo of Pinkdot 2016's spokespersons at Hong Lim Park (Photo - Pinkdot SG)

Hard to draw the line with “foreign entities” in MHA’s statement about Pink Dot sponsorship

The below post is made in reference to the statement by Ministry of Home Affairs (MHA) saying that foreign entities should not interfere in Singapore's domestic issues, especially political issues or controversial social issues with political overtones and that it will take steps to make it clear that foreign entities should not fund, support or influence events such as Pink Dot SG held at the Speakers' Corner. (read more)

By Donald Low

This is rather arbitrary and heavy-handed. It's also not immediately obvious what the legal definition of a "foreign entity" is. With individuals, citizenship can serve as a definition quite conveniently. But with companies, how do you tell?

Under our tax laws, foreign companies that operate in Singapore are considered tax residents and are subject to Singapore's tax laws. They are, by Inland Revenue Authority Of Singapore's (IRAS) definition, residents. Foreign banks that operate in Singapore and are considered important to the domestic market are required to incorporate their retail operations locally. They are, under Monetary Authority of Singapore's (MAS) regulations, a local entity.

When MAS announced this in 2012, the stated intention was "to encourage foreign banks to deepen their roots in Singapore in a way that strengthens Singapore’s financial stability." A few years ago, Economic Development Board (EDB) also embarked on a major initiative to get foreign companies to view Singapore as a home, and not just a host.

(And what about a Singapore company that is sold to a foreign company, as is happening with NOL? Does it now become a foreign company overnight?)

MHA may argue that this move doesn't undermine the government's openness to foreign companies; it restricts their ability to engage in local politics and social issues that are politically sensitive, but it does not discourage them from engaging in their legitimate businesses. But even that line is hard to draw.

For many companies, sponsoring Pink Dot makes good business sense - the LGBT customer segment has more spending power than most other segments. Plus the employees of these companies want to be part of organisations seen to be supporting progressive social causes. If I were a foreign company that wants to be associated with Pink Dot, I'd say that the Singapore government discriminates against me by not allowing me to sponsor some causes that Singaporean companies are allowed to sponsor. That can't be good for Singapore's pro-business image.

Finally, even the definition of sponsorship is not obvious. If a foreign company can't give cash contributions, what about in-kind contributions? What if it got staff to contribute instead, say by paying them a slightly higher bonus? What if it gets its staff to attend wearing specially made pink shirts with the company name and logo? And if what Pink Dot chooses to acknowledge a foreign company as a "supporter" or "friend", rather than a "sponsor"? Loopholes abound.

The point is not that there currently isn't sufficient clarity in the rules. Those rules can be specified and made crystal clear. But I don't think MHA should do that. Because if it does, it creates a lightning rod that attracts attention - including foreign attention - and makes Singapore look like the repressive state we do not want to be, and a laughing stock to the rest of the world. In the nature of such rules and regulations, they always seem petty, paranoid and overzealous.

So even as someone who's quite agnostic about Pink Dot, I think this move is ill considered.

This post was first published as a Facebook post by Donald Low and reproduced with permission