Foreign worker levies to increase, this would mean construction cost to go up and price of property to also go up, especially new projects.
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Foreign worker levies to increase, says MOM
By Saifulbahri Ismail, S Ramesh | Posted: 21 February 2011 1654 hrs
SINGAPORE: Singapore's Ministry of Manpower (MOM) is sending a strong signal to businesses to invest in productivity changes and reduce their reliance on low-skilled foreign workers.
The ministry said changes in the foreign worker levies, which will be increased in phases from January 2012 to July 2013 at six monthly intervals, will have the greatest impact on the construction and services sectors.
It said the impact on the manufacturing, marine and process sectors will be more moderate.
Announcing details of the changes, which were first revealed by Finance Minister Tharman Shanmugaratnam in his Budget Statement last Friday, MOM said employers in the construction sector would need to fork out on average S$320 more per work permit holder between now and July 2013.
Service sector employers can expect an average rise of S$260 per work permit holder.
On top of this, the levy tiers will also be tightened.
Employers in both sectors will pay up to S$600 per work permit holder by July 1 2013.
Employers in the manufacturing sector can expect an average increase of S$130 in the levy for each work permit holder between now and July 2013, accompanied by a tightening of the levy tiers. By July 2013, they will pay up to S$550 per work permit holder.
Employers of S Pass holders can expect an average increase of S$240 in the monthly levy between now and 2013, and will pay up to S$450 per S Pass holder by July 2013.
MOM said the changes are a strong signal to businesses to invest in productivity changes.
However, smaller companies in the construction industry will find this a big challenge.
Mohd Abdul Akbar, the managing director of Nan Guan Construction, said: "I think for the very small companies, the SMEs - especially the smaller ones, when you talk about productivity, it's something that's difficult to implement.
"When you talk about manufacturing, maybe it's possible through automation, improvements in processes and things like that."
MOM said there will be no change to the foreign domestic worker levy rate, and overall dependency ratios for all categories of foreign workers will remain unchanged.
There are currently 871,000 work permit holders in Singapore, of which 248,000 are foreign construction workers. There are 98,000 S Pass holders.
The Singapore Contractors Association believes the levy hikes will also impact consumers.
Andrew Khng, president of the Singapore Contractors Association, said: "We have been absorbing some of these cost increases throughout last year - the materials price have gone upwards.
"But this time, it is difficult even to absorb the levy increase because the levy increase is really substantial during this period. As a contractor, we are always sandwiched in between and sometimes costs need to be gradually spread through the whole value chain."
- CNA/cc/al