Saturday 27 October 2012

Govt will continue to give support to SMEs

But no U-turn on policies to curb foreign labour inflow, Tan Chuan-Jin reiterates
By Yasmine Yahya, The Straits Times, 26 Oct 2012

WHEN talking to business owners, whether as a minister, customer or friend, Acting Manpower Minister Tan Chuan-Jin says the discussion invariably turns to manpower issues.

Small and medium-sized enterprises (SMEs) are struggling with finding enough workers amid a tight labour market and rising business costs, including high manpower expenses.

Mr Tan told the Singapore Business Federation SME Convention yesterday that the Government is aware of these challenges and will continue to provide support as SMEs are vital to Singapore.

However, he reiterated that there will be no U-turn on policies to restrict the inflow of foreign workers by raising levies and lowering quotas.

The Government will help SMEs cope with these and future moves by managing the pace of manpower tightening carefully, he said.

While Singapore has to keep a steady momentum on this restructuring, the Government will keep a close watch on the global economy and domestic pressures.

Mr Tan also said that any changes would be incremental and announced early so companies will have time to adjust.

Despite the steps the Government is taking to tighten the supply of foreign labour, the tap is not being turned off completely, Mr Tan said.

"We will always need foreign workers to do the jobs that Singaporeans no longer want to do. And on a broader level, Singapore must remain an attractive location for global investment and talent," he added.

"Foreign investment and talent help to drive demand for our businesses, fuel economic activity, and support our drive towards becoming a highly innovative economy."

The Government would consider any suggestions on how it can optimise its policies, as long as they do not compromise on the long-term objective, Mr Tan added.

"For example, earlier this year, we increased the period of employment of unskilled work permit holders, from six years to 10 years," he said.

"This was in response to suggestions from construction companies that they wished to retain experienced workers who are more productive."

Mr Tan reassured the 300 or so business people at the convention that the Government wants SMEs to succeed. After all, they hire seven out of every 10 workers in Singapore and contribute more than half of the gross domestic product.

"In times of crisis, SMEs stay rooted in Singapore and work with us to restore growth and protect Singaporean jobs."
SMEs also represent the Singapore brand as they expand around the world, extending the country's economic sphere of influence.

Mr Tan said one of the most common questions he is asked is why the Government is tightening the supply of foreign workers if it really wants SMEs to prosper, and that the question "often comes with a certain tendency to target companies or Government as the 'enemy'".

"This is not helpful. There is no 'enemy'. We are all in this together, and we move in the same direction."

The reality is that Singapore's days of relying on low-cost foreign labour to compete are limited, he added, as the country's physical infrastructure is approaching its limits.
Relying on low-cost labour is also a race to the bottom, he said.

"While price competition is inadvertent and a necessary business consideration, the price advantage that we offer cannot be based just on lower labour cost.

"If so, we will not be able to sustain our competitiveness against our neighbours, who will always have more ready access to low-cost labour."

Foreign firms' concern over inflow of labour

MULTI-NATIONALS are still keen to do business in Singapore, but many are concerned that the Government's moves to limit the inflow of foreign labour will restrict their growth plans.

If this uncertainty lingers for much longer, these firms might just move out, said Singapore International Chamber of Commerce (SICC) chief executive Phillip Overmyer yesterday.

Many foreign companies want to use Singapore as a base for training and research and development, and so want to relocate staff from overseas, noted Mr Overmyer, who was speaking as part of a panel at the Singapore Business Federation SME Convention yesterday. "The challenge though is that I think we, Singapore, we're not making up our mind quickly enough (on) what they're going to be allowed to do.

"Companies are ready to bring in talent from all over the world but (there is) a concern... about whether or not Singapore wants those people to come here and how many of them we can take."
Many SICC members are waiting to see how the Government's foreign labour policy pans out. If the uncertainty continues, some might start to move their operations out of Singapore, Mr Overmyer said.

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