Covid-19: Subcontractors band together to urge Govt to extend waiver on foreign worker levies

• Subcontractors said that it is too soon for them to resume foreign worker levy payments
• They are urging the Government to extend the waiver of the payments
• Some subcontractors said that safe distancing measures for foreign workers are too onerous
• Manpower Minister Josephine Teo, BCA looking at the concerns

SINGAPORE — Construction industry subcontractors, already hard hit by the Covid-19 crisis, have banded together to urge the Government to extend a waiver of foreign worker levies, arguing that they cannot afford to resume payments this month as most workers are not yet able to work.

Mr Peh Ke Pin, general manager of construction firm PQ Builders, which is among 120 subcontracting firms that backed a June 30 letter to the authorities raising these concerns written by three other firms, told TODAY: “The original intention of the levy is to control the (number of) workers.

“Now, when our workers are no longer under our control and we are not having any productive work to generate revenue, why does the Ministry of Manpower (MOM) still have the basis to ask us to pay for levy?” 

Most of his 130 foreign workers remain in Tuas View Dormitory and have not returned to work.

Foreign worker levies range between S$250 and S$950 per worker a month. The levies have been waived since April owing to the impact of Covid-19 but payments are set to resume as the authorities prepare to release workers quarantined in dormitories back into the workforce.

In a Facebook post on June 25, Manpower Minister Josephine Teo said that she has received requests from employers with workers living in the dormitories, asking for an extension of levy waivers for a few more months.

She wrote that she “will seriously consider their requests, and do what I can to help SMEs (small- and medium-sized enterprises) in particular get back on track”.

On June 27, the Building and Construction Authority (BCA) announced the S$1.36 billion construction support package to help the construction sector cope with the impact of Covid-19 during this phase.

As part of the package, MOM also announced that construction firms will be eligible for foreign worker levy rebates of $90 a month for each work permit holder, from August 2020 until December 2021.

However, Mr Peh and other contractors argue that given the uncertainty over the timing of the release of workers, and delays in payments from the main contractors, they will not receive income for several months. The S$90 monthly rebate is a small sum compared with the waiver of the levies, they said.

“What is S$90 versus S$900 or S$600? I’d much rather the levies continue to be waived now when we have no income. Once things are back on track, we don’t need that S$90,” Mr Peh said.

On July 24, Mr Lawrence Wong, co-chair of the Covid-19 governmental taskforce, said that all dormitories will be cleared of Covid-19 by Aug 7, with the exception of 17 standalone blocks in eight purpose-built dormitories that serve as quarantine facilities. Mr Wong is also Education Minister.

Mr Nick Tay, director of Hiap Huat Demolition Contractors, said that the timing of when the workers can resume working is uncertain.

“At first we were told that all dorms would be cleared by the first half of July, then the second half of July and now it’s August. If things are so uncertain, they should extend the waivers and rebates until the point that the workers are cleared to work,” he said. “It’s not fair to put this pressure on us while there’s no movement, no income.”

His 12 workers remain in PPT Lodge 1B, a dormitory in Seletar.

Deputy Prime Minister Heng Swee Keat, who is also Finance Minister, announced in the Solidarity Budget speech on April 6 that the foreign worker levy due in April would be waived, and firms would receive a rebate of S$750 that month for each work permit or S pass holder, from levies paid this year.

After the circuit breaker that restricted activities in April and May was extended for four more weeks, the waiver and rebate were extended by a month.

In a speech in late May on the fourth national budget, dubbed the Fortitude Budget, Mr Heng announced that levy rebates would be extended for up to two more months — waivers of 100 per cent in June, and 50 per cent in July, with rebates of S$750 in June, and S$375 in July.

Mr Peh said: “Though the Government has thrown up money to support some of the costs, most of it has been passed to our workers and staff. So the company has been taking care of all the accommodation costs, vehicle maintenance and things like that.”

He added: “For my company alone, from April to June, we are in the negative by about S$400,000. Now that we have to start paying the levies with no income, how will we survive?”

Other subcontractors who spoke to TODAY complained that the safe distancing measures, which their workers have to adhere to while being transported to and from worksites, will also increase costs.

Mr Jackson Tay, chief operating officer at building supplies firm Hafary, which employs about 150 foreign workers, said that while he understands that certain safe distancing guidelines have to be met, transporting small groups of workers at a time “does not make sense”.

“If you can’t even keep people 1m apart in the MRT or buses, what’s the difference here? What's the difference between a foreign worker living in a dormitory and an MRT passenger?” he asked.

Mr Tay added that this requirement will “cause a lot of stress on the transport industry”.

“If every company is going to need to rent 10 buses on a day-to-day basis to and fro, is that readily available? And what about the added costs?”

The letter setting out some of these problems was sent by three subcontractors on June 30 and addressed to MOM, BCA and The Singapore Contractors Association. The three firms declined to be interviewed by TODAY.

In a reply to TODAY's query on the matter, BCA said that it held a meeting with the subcontractors on July 17 “to better understand their concerns” with the discussion “touching largely on the challenges of restarting work including financial issues”.