Singapore 2013 Budget Salves Where It Cuts: Rikvin

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In line with its vision to create quality growth, Singapore will further tighten its foreign manpower policies, but not without attempting to balm the pain for enterprises, says company formation specialist, Rikvin.

Singapore company registration specialists

Companies that look forward to a long term growth in Asia are still in good stead to place themselves in Singapore. However, those that can neither adjust to the new paradigm may find greener pastures overseas.

In a bid to create a better Singapore that is built on quality and inclusive growth, the government will intensify its economic restructuring efforts, as well as strengthen its social safety nets. This focus, which includes further calibration of Singapore Work Visas policies, was highlighted during the 2013 Budget Statement early this week.

Singapore company registration specialist Rikvin recognizes that the government’s new paradigm will lead to increased business costs for many enterprises in the near term, and may compel some to fold or go elsewhere. However, for those who are willing to move up the value chain and contribute to a "dynamic and re-energised SME scene,"over the longer term, the government is willing to offer a helping hand.

According to Mr. Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister and Minister for Finance, this year’s S$2.4 billion budget surplus will go towards mitigating the effects of necessary economic restructuring measures. These measures include raising foreign worker levies (FWL) for all sectors, cutting Dependency Ratio Ceilings (DRCs) for the services sector as well as imposing stricter qualifying criteria for the S Pass and Singapore Employment Pass.

Foreign Worker Levies
With effect from 1 July 2014, FWL for S Pass and work permit holders will be raised. Sectors with the weakest productivity growth as well as heaviest reliance on foreign workers, will be subject to the largest levy hikes. For example, construction firms will be charged S$160 per work permit holder; while S Pass holders from all sectors and work permit holders from the services industry will be charged S$90 per worker.

Dependency Ratio Ceilings
Come 1 July 2013, the services sector will see its DRC lowered from 45% to 40%. However, firms will be allowed to deploy their foreign workers more flexibly than before. The marine sector is expected to face lower DRCs from 2016 to 2018.

S Pass and Employment Pass
In a bid to encourage firms to consider Singaporeans first, before they hire overseas workers.
The qualifying criteria as well as minimum salary for the mid-skilled S Pass workers will be raised. The new criteria will come into effect on 1 January 2014.

To salve the pain arising from these measures, the government has announced a 3-Year Transition Support Package. The measures, which include the Wage Credit Scheme, Corporate Tax Rebate and PIC Scheme Bonus, as detailed in our previous announcement is worth S$5.3 billion.

Commenting on the measures, Ms. Christine Lim, General Manager of Rikvin, said, “The government is pushing forward on its pledge that there will be no regression on its manpower policies, understanding that it won’t go down well for many businesses. However, to sweeten the bitter pill, it has put forth the Transition Support Package. As the name suggests, this package offers a temporary respite. Companies that look forward to a long term growth in Asia are still in good stead to place themselves in Singapore. However, those that can neither adjust to the new paradigm nor wish to contribute to the quality growth that Singapore seeks, may find greener pastures overseas.”

About Rikvin:

Established in 1998, Rikvin has since partnered with thousands of investors, entrepreneurs and professionals in their pursuit to access business opportunities overseas. Rikvin’s areas of expertise include company incorporation, offshore company setup, accounting, taxation and other related corporate services. Rikvin is also a licensed employment agency with the Ministry of Manpower (MOM) and offers a full spectrum of work pass services for foreign professionals who wish to relocate to Singapore.

20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
+65 6320 1888
http://www.rikvin.com

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Satish Bakhda
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