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Foreign worker levy will remain: Teo Ser Luck

SINGAPORE — The foreign worker levy is here to stay, said Minister of State for Manpower Teo Ser Luck yesterday, even as the Singapore Business Federation’s (SBF) SME committee (SMEC) once again called for a review of the issue in its recommendations for the upcoming Budget.

Construction workers working at a construction site, 15 Jan, 2014. Photo: Ernest Chua/TODAY

Construction workers working at a construction site, 15 Jan, 2014. Photo: Ernest Chua/TODAY

SINGAPORE — The foreign worker levy is here to stay, said Minister of State for Manpower Teo Ser Luck yesterday, even as the Singapore Business Federation’s (SBF) SME committee (SMEC) once again called for a review of the issue in its recommendations for the upcoming Budget.

“The foreign worker levy will stay put. The situation here is that we have to monitor the current climate. I don’t want to raise expectations because the manpower policy we implemented is ongoing … and there’s a lot of refinement along the way. We understand that businesses are facing some challenges, so we have to look at the situation, and how this whole year will pan out,” said Mr Teo.

The firmer stance comes after Mr Teo said last October at a dialogue session with the SBF that the levy will be “looked into” as Singapore is moving into economic headwinds. Back then, he had stressed that he was not committing to any form of policy change but that the ministry was always reviewing policies based on feedback from the ground.

Yesterday, instead of focusing on levies, Mr Teo urged small and medium enterprises (SMEs) to instead continue to help build up the Singaporean core and make sure that Singaporeans have equal job opportunities with a focus on being “manpower lean”.

“The priority now is to help companies make a change. It’s not just about costs, but how much manpower is used,” said Mr Teo.

Last year, the Manpower Ministry launched the Lean Enterprise Development (LED) scheme in a two-year pilot to give SMEs more leeway in hiring and retaining foreign workers — provided they commit to becoming more manpower-lean, developing their workers, and building a stronger Singaporean core eventually.

Mr Teo yesterday highlighted the scheme as “a very important aspect of the transition, because it allows enterprises who are willing to change the time to make the change”.

The comments made by Mr Teo were on the back of the Budget recommendations presented to the Government yesterday by the SMEC, in which Mr Teo, together with Dr Koh Poh Koon, Minister of State for Trade and Industry, are co-advisers.

At the event, the SMEC announced a total of 13 suggestions grouped under two key areas.

The first key area is to overcome growth challenges faced by SMEs. These include managing manpower and rental costs, improving transportation and logistics systems, and aid with financing.

Citing an example to manage manpower costs, SMEC chairman Lawrence Leow suggested a further deferment of the increase in the foreign worker levy. “In Budget 2015, the Government deferred the planned increases to the foreign worker levy by one year. Here, we are suggesting to defer the increases further, and conduct a review to reduce the levy quantum, taking into consideration the latest inflow of foreign workers,” he said.

The second key area is for the Government to adopt a new paradigm for enterprise growth.

Some suggestions include the reviewing of enterprise development policies where SME development is the centre of economic strategies. Another is to provide greater support for innovation by SMEs.

“More focus and resources need to go into supporting the growth of our SMEs to help more local companies become global players, particularly so given the constraints and limitations of our small domestic economy,” said Mr Leow.

The SMEC also called for the establishment of a single authority dedicated to drive SME development, preferably led by a Minister. This is the second time the SMEC has called for such an establishment; the first was in its Budget recommendations last year. The SBF mentioned this recommendation in its latest position paper earlier this month.

Separately, at the discussion, the SBF added that there has been an increase in take-up on Government procurement projects, but more can be improved.

SBF CEO Ho Meng Kit said: “The Government procurement figures are actually quite healthy …but I think the spread can be better because only 3-4 per cent of SMEs are benefitting from Government contracts.” SBF added that it will take more steps to help SMEs better understand government procurement processes.

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