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The Business Times

Scal explains how foreign worker levy has hit industry

Levies have hurt smaller contractors hard; members urged to mechanise

THE construction industry, which has been badly hit by foreign worker curbs, say that a proposal to link a company's foreign worker quota to its efforts to improve productivity would help ease the strain.

However, Singapore Contractors Association Ltd (Scal) president Ho Nyok Yong says that the SME Committee's proposal is unlikely to eliminate the impact the foreign worker hiring restrictions have had on the industry - especially the higher foreign worker levy.

'We try to change our method of construction, the techniques, and mechanise...the government came up with $250 million ...through the productivity fund, so we tried to tag along.

'But all of a sudden the levy was announced.., and it (is supposed to) keep jumping to 2013 so by doing this we have an issue.' Contracts that contractors previously secured, for instance, would now see higher costs that they will likely have to absorb.

According to the results of the Singapore Business Federation's latest National Business Survey that were released yesterday, 20 per cent of the 973 respondents hope that the upcoming Budget will see a lowering of foreign worker levies. This makes it the top wish of SMEs here. A large number of SMEs that asked for lower levies came from the construction sector.

Dr Ho said that the levies have hit smaller contractors hard, and may sound the death knell for these firms. This in turn could also have an impact on the bigger players in the industry, he said.

'The bigger ones will depend on the smaller ones because they sub (contract) to them,' said Dr Ho. 'You need all the masters to come together to build the houses, to build the infrastructure and flyovers...'

He added that there are industry limitations when it comes to mechanising processes and raising productivity through pre-casting.

'But pre-cast is only part of it. There are things that you can't pre-cast... you still need workers.'

Still, he said that Scal will encourage its members to mechanise as much as possible to counter the effects of the higher levies and the foreign worker quota. And if the government wants to introduce more measures to further restrict the number of foreign workers here, it should give sufficient warning to businesses, said Dr Ho.

Felda Chay