Ultimately firms will have to look into their operations strategies and figure out ways to do things smarter. This means doing things in more productive and innovative ways and tapping the PIC Scheme in the same swoop.
Singapore (PRWEB) March 09, 2012
Although widely contested during the recently-concluded Budget 2012 debates, Singapore company registration specialists Rikvin is optimistic that the latest measures to moderate the country’s dependence on basic-skilled foreign workers are a step in the right direction. Rikvin supports the Singapore government’s call for business owners and workers to take road to higher productivity and skills.
According to the Budget 2012 statement, the Dependency Ratio Ceilings (DRCs) for foreign workers will be lowered by 5% respectively in the manufacturing and services sectors to 65% and 50% respectively. Similarly, the sub-DRC of the S Pass for all sectors will be lowered by 5% to 20%.
Additionally, the construction industry will see a 5% reduction in Man-Year Entitlements (MYE)
as well as a higher Foreign Worker Levy (FWL) of S$500 for every basic-skilled work permit holder in the MYE-waiver category.
All measures will come into effect on 1 July 2012. This means that firms that hire new foreign workers must abide by the new DRCs. They also have approximately two-years grace to adjust to and comply with the new DRCs for existing workers.
Analysis by Rikvin shows that these measures are necessary to wean Singapore off its dependence on basic-skilled foreign manpower. According to the Ministry of Manpower, foreign workers have grown at a rate of 7.5% per annum over the past two years.
Commenting on the uptrend, Mr. Satish Bakhda, Head of Rikvin’s Operations said, “The momentum is not sustainable in the long run and we support the government’s decision to mitigate the situation in a timely manner. Moving forward, Singapore needs more quality workers and not just high quantities of workers.”
Further analysis by Rikvin shows that businesses, especially SMEs, seem to have to bear the brunt of these measures and are hard pressed to forgo lower-skilled workers or pay more for them. However, and as communicated by Deputy Prime Minister Mr. Tharman Shanmugaratnam, SMEs must adapt to the reality of that “Singapore is not a low-cost business location, and will not be.”
Echoing the sentiment, Mr. Bakhda said, “There will be teething pains. Ultimately firms, especially SMEs in all industry sectors, will have to look into their operations strategies and figure out ways to do things smarter. This means doing things in more productive and innovative ways and tapping the Productivity and Innovation Credit Scheme in the same swoop.”
“The challenge however, is how soon entrepreneurs who start a Singapore company will accept this new reality of doing business in Singapore. Similarly, it remains to be seen how quickly workers will rise to the challenge of upgrading their skills in order to positively affect their employability and quality of life,” added Mr. Bakhda.
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Rikvin is a Singapore-based consultancy that offers business solutions for both local and foreign professionals, investors and entrepreneurs. Rikvin’s areas of expertise include Singapore company registration, incorporation, offshore company setup, accounting, taxation and other related corporate services. Rikvin also provides Singapore work visa and immigration services for foreign professionals wishing to relocate to Singapore.
Rikvin Pte Ltd
20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
(65) 6320 1888