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S’pore needs to relook foreign labour while maintaining productivity thrust: Heng Swee Keat

SINGAPORE — The Republic needs to review its foreign manpower policy in the coming years, but the inflow of foreign workers must remain “well-calibrated” to encourage firms to continue improving productivity, said Finance Minister Heng Swee Keat.

SINGAPORE — The Republic needs to review its foreign manpower policy in the coming years, but the inflow of foreign workers must remain "well-calibrated" to encourage firms to continue improving productivity, said Finance Minister Heng Swee Keat.

"We need to maintain that calibration in order to send a very strong signal that productivity improvement is going to be key, and investing in automation, a better way of doing things, is going to be the key to our future. We should not make changes too hastily… Because if I can get workers cheaply, why should I invest in machines," said Mr Heng in an interview with the local media at the Treasury building on Wednesday (April 18).

Mr Heng, who leads the Future Economy Council (FEC) tasked to develop skills for the future and to support productivity-led economic growth, had called for the interview to provide an update on the council's efforts.

Asked if Singapore's stringent immigration policies warrant a rethink amid its demographic slowdown, the minister said: "Do we need to review (foreign manpower policies)? I'd say that, yes, we do, in the coming years. But I don't want to send the wrong expectation that anytime soon, we are going to make changes. Then the pressure (to boost productivity) will be lost. We need to keep up with this thrust."

In January, Monetary Authority of Singapore (MAS) chief Ravi Menon devoted much of his speech at a high-profile conference to foreign labour, a tinderbox issue among Singaporeans. The central bank chief made an impassioned plea for Singapore to "reframe our question on foreign workers", given the limited scope in raising birth rates and labour force participation rate.

Last December, economists said it may be time to re-look the Government's stringent immigration policies following a UOB report on Singapore's "demographic time bomb" which will start ticking this year, when the share of the population who are aged 65 and above will match that of those under 15 for the first time.

The Government started tightening its immigration and foreign manpower policies after the watershed General Election in 2011, when public unhappiness with the inflow of foreigners and an infrastructure bottleneck translated into a lower vote share for the ruling party. A Population White Paper, published in 2013, that projected a population of up to 6.9 million for Singapore in 2030 also prompted a public backlash over an erosion of the "Singaporean core".

Since foreign labour policies were tightened, the Government has said, on several occasions, that there would not be a U-turn despite requests from businesses.

In interviews with TODAY earlier this year, some economists and manpower experts had called for a sector-specific manpower policy, which could provide a larger pipeline of foreigners to growing sectors — such as technology and e-commerce — as well as areas where jobs are traditionally shunned by Singaporeans, like integrated and long-term care.

Some also suggested that foreign workers be considered only if the roles cannot be automated, and no Singaporeans want to do the job, or have the requisite skills.

Without elaborating on the thrust of the review, Mr Heng stressed on Wednesday that foreign workforce growth must be moderated by boosting productivity.

"Our priority in the coming years must be to continue to develop Singaporeans' capabilities and, at the same time, having a well-calibrated inflow of foreign manpower that can complement our people… Because if you can get a cheap worker, why will I bother to automate? Therefore, you never learn to automate, and you never need to operate in a different way. So we need to keep up with that," he said, urging local firms to tap regional talent in their journeys toward internationalisation.

After several years of sluggish performance, including protracted periods of zero growth, Singapore's productivity grew by 4.5 per cent last year, driven mainly by outward-oriented sectors such as manufacturing, wholesale and retail trade as well as finance and insurance.


Asked to assess the council's efforts in transforming the economy, Mr Heng noted that progress has been "uneven" across various sectors. "The number and sizes of companies (in each sector), and their level of sophistication is changing," he said.

"Non-tradeable" sectors such as domestic retail, which are not traded on international markets and used to be "more immune to international competition", have also been hit by new waves of change like e-commerce. "It used to be that restaurants in one area are just competing with restaurants nearby. But now, with food delivery… the catchment is wider. And what it means is that opportunities are widening… and competition is also greater. The need to be better is even stronger," he said.

"We will have to find ways and means of reaching out to a whole range of companies," he said, adding that his team hopes to work more closely with trade associations and chambers in this push.

In the next phase of its work, the FEC wants to focus on making innovation "pervasive" across sectors, deepening capabilities for firms and the people, as well as strengthening partnerships within and across various sectors.

As spelt out in the report of the Committee on the Future Economy, 23 sectors of the Singapore economy have been grouped under six industry clusters — manufacturing, built environment, trade and connectivity, essential domestic services, modern services and lifestyle.

Each cluster will be helmed by a minister and at least one private sector or union representative. In the months ahead, the clusters will unveil plans to promote innovation, deepen capabilities and encourage partnerships in the sectors under their purview. Mr Heng said: "(We must) learn how to bring our diverse capabilities together, to co-operate on common challenges and to compete in the sense of differentiating our products."

Citing the metaphor of a hawker centre, he added: "If everyone sells identical food, after a while, all except maybe one or two will survive. In a hawker centre where everybody sells different food, in a way they are competing, but at the same time, they are cooperating, because you know that going to the hawker centre, you will always have a great variety of food… This is what I hope the Singapore companies can be, that everyone is good in some way, and together, you have a whole reputation that this is the best hawker centre in town."


Asked about the forthcoming Cabinet reshuffle, Mr Heng would only say: "I will be very happy to continue my job as Finance Minister. There are many things that we need to do, as I had announced in the Budget. And there are important expectations and needs that we need to provide for…This is a major challenge in the coming years and I have to give more thought to it… And I hope that I will have very capable colleagues to help me in this work."

Mr Heng, 57, has been touted as one of the frontrunners to be Singapore's next Prime Minister.

Since entering politics in 2011, he has overseen several important national initiatives, including the Our Singapore Conversation project and leading a steering committee that planned Singapore's Golden Jubilee celebrations.

He was appointed Finance Minister in October 2015 after serving as Minister for Education from 2011 to 2015. Before entering politics, he was the MAS' managing director.

Prior to that, he was the Permanent Secretary at the Ministry of Trade and Industry, and also served as Principal Private Secretary to founding Prime Minister Lee Kuan Yew from 1997 to 2001.

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