Foreign worker levies are a "huge burden" for SMEs

Budget 2015 should focus on holistic development and growth of SMEs, as they make up the core of Singapore's enterprises.

That was the message from the Singapore Business Federation (SBF), which this week provided it's feedback on Budget 2014 along with a wish-list for Budget 2015 by its SME Committee (SMEC).

Topping its list of concerns was further raises of foreign worker levies for S Pass - mid-level - holders, which it said have artificially inflated the costs for many businesses. As dependency ratio ceilings and minimum salary requirements already apply to S Pass holders, SBF said employers should not have to pay levies for hiring them.

It said that its SBF National Business Survey 2014/15 showed these levies are a "huge burden on businesses as they grapple with rising costs".

"The steep increases in the levies over the past few years have significantly impacted SMEs’ profitability," the report read.

It added the survey, conducted by the Singapore Chinese Chamber of Commerce and Industry (SCCCI), 66.5% of respondents wished foreign worker levies are not further raised, and that quotas are not tightened.

The Progressive Wage Model (PWM) along with other government schemes have been helping low wage workers, with more than 270 companies adopting them. Real income increments have also increase by 4.6% it said, negating the need for levies at all.

In view of this, the relevance of foreign worker levies as a lever to restrict foreign worker access and protection of the local wages has been diminished," it read. "Studies will be required to address business costs which are driven up unnecessarily."

These concerns were mapped out under three key focal points for their recommedations for Budget 2015, including SME development strategy, SME transformation and SME growth strategy.

As part of this, it is calling for the establishment of a single SME authority - or empowering an existing government agency - for the role of managing SME issues, as well as helping more SMEs develop into competitive players on a global scale.

"SMEs make up the core of local enterprises. For Budget 2015, the SMEC urges the Government to place SMEs at the heart of economic strategies as we review the next phase of restructuring," said said Lawrence Leow, Chairman of SMEC. "SMEC recommends that the Government take more proactive steps to help SMEs overcome business challenges, as well as accelerate the development and growth of the SME sector."

S. S. Teo, chairman of SBF added: "Singapore is undergoing a critical, but challenging and necessary restructuring phase at a near full employment situation. For us to succeed, it is essential that businesses, employees and the government continue to work closely towards a common goal." 

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