TR EMERITUS

By Shamim Adam from Bloomberg After luring investor Jim Rogers, actor Jet Li, Filipino maids and Bangladeshi construction workers with one of Asia’s most open immigration policies, Singapore is becoming a little less welcoming to foreigners. Singapore almost doubled the rate it grants citizenship and permanent residence in the past five years to counter a falling birth rate, and let firms bring in thousands to work at hotels, shipyards and restaurants. The move saw foreigners make up one in every three people. The government plans to slow the inflow to avoid being “overwhelmed,” and unveiled higher levies for overseas laborers, cooks and janitors in its Feb. 22 budget. The effort is part of a shift in economic policies designed to ease discontent in the aftermath of the deepest recession since independence in 1965 and to shore up public support before elections that must be held by February 2012. The danger is that the changes may make Singapore more expensive for companies to operate in and less attractive to investors. “The economy generates more jobs than can be filled by locals and it wasn’t that long ago the government was arguing vehemently that we need foreign talent to ensure strong and sustainable growth,” said Song Seng-Wun, an economist at CIMB- GK Securities Pte in Singapore. “They’re trying to soothe Singaporeans’ anxiety that the whole island is swamped with foreigners. It’s politics.”   Election Timing The government’s shift, which includes higher school and medical fees for non-citizens, has spurred speculation that an election may be called as early as this year. Prime Minister Lee Hsien Loong on Feb. 17 directed the Elections Department to update electoral rolls with eligible voters and for the process to be completed by March 31. A day later, a government gazette published the boundaries of new and existing polling districts. Lee’s People’s Action Party was co-founded in 1954 by his father, former Prime Minister Lee Kuan Yew, and it has been in power since 1959. Its politicians currently hold 82 of 84 elected seats in parliament. Prime Minister Lee in a speech on Jan. 25 noted a speculation “fever” of early elections, while adding that it’s not imminent. Support for long-serving governments in Asia has diminished in recent years. At the last Singapore election in 2006, Lee’s party won about 67 percent of ballots, 8 percentage points lower than the previous vote. In neighboring Malaysia, voters reduced the ruling coalition’s majority to a record low in 2008. Japan in August saw the ouster of the Liberal Democratic Party, which ruled the nation for almost all the postwar period.   Hit to Economy Singapore’s economy contracted 2 percent last year as the global slump reduced demand for goods, hurting the island’s exports. The trade ministry last week said it expects an expansion as much as 6.5 percent in 2010. Policy makers in Singapore say productivity is a cornerstone of their economic blueprint for the next decade, aiming to reduce the island’s dependence on exports. The government has blamed some industries’ use of cheaper, low- skilled foreign labor as a reason for low productivity in the past 10 years. “We’re not against foreign workers,” Lim Swee Say, a government minister and secretary-general of the National Trades Union Congress, said at a Feb. 1 media briefing. “But just like drinking wine, wine is good but too much wine is bad. Foreign workers are good but too many foreign workers growing at too fast a rate is no good for the economy because it dilutes our focus on productivity.”   Birth Rate Immigration had been a key component of Singapore’s population and economic strategy, given the failure of other incentives offered since 1987 to arrest a birth-rate decline -- such as tax breaks, subsidies and cash bonuses. Singapore, which has one-quarter the land area of Rhode Island, has no natural resources and the government relies on the skills of its populace to drive growth. The government insists it’s still welcoming foreign talent, suggesting it will aim to reduce the inflow of lower-skilled workers rather than bankers, scientists and athletes. The laborers who build office towers and ships and serve at the city’s restaurants and hotels are mostly not allowed to apply to be permanent residents or citizens. The influx of foreigners, both skilled and unskilled, has boosted sales for property developers such as CapitaLand Ltd., transportation providers including SMRT Corp. and telephone companies such as Singapore Telecommunications Ltd. It’s also helped consumption, given the birth rate has been below the level needed to replace the population since the 1970s.   Citizenship, Residence About 20,513 people became Singapore citizens in 2008, and another 79,167 were given permanent residence. The tally is three times more than the 32,423 babies born to citizens that year. Of the 4.99 million population, about 1.8 million are non- citizens. Disgruntled Singaporeans say the immigration policy means more competition with newcomers for jobs, public housing and places in choice in schools for their children. In the past few months, the government has lowered healthcare subsidies for permanent residents, increased public school fees for non- citizens, and tweaked a balloting system to give Singaporean children twice the chance of getting into the educational institution of their choice. To address the flood of workers brought in by companies such as SembCorp Marine Ltd., the world’s second-biggest oil-rig maker, and casino operator Genting Singapore Plc, the government now plans to increase levies on foreign labor.   Levies on Workers Singapore will raise the monthly charge for foreign workers in manufacturing and services industries by an average S$100 ($71) over the next three years, while construction companies will see a larger increase because there is more room for productivity improvements, Finance Minister Tharman Shanmugaratnam said Feb. 22. The first increase from July will see a rise of as much as S$30 a month per worker, he said. An employer currently pays the government between S$50 and S$470 monthly per foreign worker. Professionals and executives who earn more than S$2,500 fall under a separate category that doesn’t require a levy. The government’s latest move may cost SembCorp Marine, which estimates it has as many as 20,000 foreign workers and sub-contractors, an additional S$600,000 a month, said Ong Poh Kwee, the company’s deputy president. “It will add on to the cost of operations,” Ong said. “This is the catalyst to driving productivity and adds to the urgency” of becoming more efficient. The levy increase will slow economic growth and raise business costs, said Alvin Liew, an economist at Standard Chartered Bank in Singapore.   ‘Hollowing-Out’ “The new policy on foreign workers may place a disproportionate burden on certain sectors, posing risks to their profitability in the next few years,” Liew said. “The most obvious victim is the construction sector, followed by low- end manufacturing and labor-intensive services industries like hotels and restaurants.” Higher costs may also accelerate the “hollowing-out” of some manufacturing industries, which may move to cheaper locations in the region, he said. For consumers, Singapore will likely become a more expensive place for hotel stays and restaurant meals, he said. Singapore cannot slow down the intake of foreigners too much because it will hurt growth even as locals complain of competition in schools or congestion in trains, buses and public areas, Lee Kuan Yew, now known as Minister Mentor, said at a community event Feb. 18. In an interview with National Geographic last year, he called the country’s recent migrants “hungry” and “determined to succeed” compared with locals who are “less hard driving and hard-striving.” “We tell them, look, they have to work harder or they’ll become stupid,” the elder Lee said of Singaporeans. “It’s just they don’t see the point of it. Why race when you can canter and save your energy and do other things? A regular inflow of migrants without too huge a deluge will keep” a society “on its toes,” he said. - Bloomberg  Read More →

Written by Our Correspondent Singapore's very own Korea Central News Agency (official media of North Korea) - Channel News Asia has published a detailed article on the PAP MPs singing the praises of the latest announcements in the Budget speech made by Finance Minister Tharman Shanmugaratnam in unison. Heng Chee How, MP for Jalan Besar said: ""I'm extremely happy with the announcements, especially with productivity and inclusive growth. Last year, I emphasised in Parliament the need for productivity. The government is putting its money where the mouth is now, supporting ESC strongly in this." Josephine Teo, MP for Bishan-Toa Payoh agreed: ""I think the budget statement today shows very clearly that the government is not only very serious, but also putting significant money where its mouth is." Jessica Tan, MP for East Coast added: "The challenge now is there are so many schemes. How do companies understand and leverage those in a timely fashion because we are looking at a short window and we need to make sure that the companies are really able to leverage on that." Amy Khor, MP for Hong Kah concurred: ""The government has stated very explicitly through the Budget that it will not want to increase the number of foreign workers into Singapore and that there is a limit to this. Therefore, foreign workers levy will have to be raised over time. The focus now is on the productivity of the workers so we do not have to rely more on foreign workers. I think that was one of the key feedback received by REACH through its feedback contributors." Singapore is the only "democracy" in the entire world when one can find such "united" MPs who share exactly the same ideas and thoughts with one another which begs the question why we need so many of them in the first place in parliament. The "music" they played together was in perfect synchrony with one another that it would have put the Singapore symphony orchestra to shame, thanks to Singapore's strongman Lee Kuan Yew who said in 2008: "To be the prime minister, you don't have to know every instrument, but you got to recognise, ah, he's a good violinist, he'll be the first violinist, he'll be the double bass. He will play the viola, he will have the trumpet, he will do the drums. Then you coordinate them and then you have great music. And if you already have a great orchestra, you can put a dummy there and you still got great music." [Source: Channel News Asia, 5 March 2008] With 82 dummy PAP MPs in Parliament, it's little wonder that they are able to sing to the tune of the conductor as and when they are required and Singaporeans still get to hear great "music" from them at a cost of $13,000 per dummy monthly. Perhaps the Singapore KCNA should simply just interview Lee only to spare them the hassle of interviewing so many dummies. North Korea's Kim Jong IL would be amazed at how Lee managed to run a totalitarian state in the same mold like his with so many dummy MPs around to portray Singapore as a "democracy" to the rest of the world.  Read More →

Written by Our Correspondent The recent move by the ruling party to increase the Foreign Worker Levy will only go to increase the coffers of the government without benefiting the ordinary workers, both Singaporeans and foreigners alike. Under the new scheme, most Work Permit holders will have their rates raised by between $10 and $30 this year while those in manufacturing and services will see their levies rise by an average of $100 at the end of the three years. Levies for S-Pass workers will increase from the current $50 monthly to a maximum of $250 by July 2012. The ruling party claimed that the move will deter employers from hiring foreigners and encourage them to provide more employment opportunities to locals. If this is really its intention, then it should follow the example of Australia and make it more difficult for companies to recruit foreigners by raising the quota for Singapore workers and pegging the levy to the difference in wages between locals and foreigners. In all likelihood, the inadequate measures taken were no more than a "wayang" to placate angry Singaporeans that it is doing something to protect their interests. Take for example an IT enginner - a local will command a monthly pay of between $2,500 - $3,000. A company can offer a foreigner $1,500 - $1,800 and he/she will still take up the job. The maximum $250 levy for S Passes will do nothing to encourage the employer to hire a local as it will still "save" much more by employing foreigners. Furthermore, there is no way to stop unscrupulous employers for passing the higher cost of employing foreigners to the workers themselves thereby putting them in a vulnerable position of being exploited. For foreigners who are desperate to land a job here in Singapore, they will not protest against having their basic salaries cut just to "make up" for the hike in Foreign Worker Levy. At the end of the day, the employers will not be affected by the hike in the levy as their profit margin will remain the same. The same numbers of foreign workers will still be employed at a lower cost while Singapore workers continue to face discrimination in their own country. Ultimately, it is the government which will be the greatest beneficiary as it is expected to rake in more levies from the employers. If the government is serious about reducing Singapore's dependence on foreign workers and to boost productivity, it should stop the issuing of S passes completely. Foreigners on these passes usually compete directly with Singaporeans for jobs which can otherwise be taken up by them and they do not add value to Singapore except decreasing labor costs and increasing the profits reaped by their employers. Strict restrictions should be imposed on work permit holders - only industries and sectors which are unable to employ Singaporeans are allowed to employ foreigners and for each foreigner employed, a levy amounting to the difference in pay between a foreign and local worker should be paid. At the same time, a minimum residency period of 2 year should be mandated before foreign workers can apply for Singapore PR. The "low" employment rate of 3 per cent for Singapore is highly misleading as both Singapore citizens and PRs are lumped together under the same category "resident". For purposes of clarity, the Manpower Ministry should put PRs in the "foreigner" category in all its guidelines and regulations. Under the current rule, a company needs to fulfill a quota in the number of "local" workers (including PRs) before they can hire foreigners which is easily circumvented by companies getting earlier arrivals of foreign workers to take up Singapore PR. As Singapore PRs are easily granted within a few months, this enables them to artificially increase the quota thereby freeing more slots to employ foreign workers. For example, a company with a staff comprising of 20 per cent citizens, 50 per cent PRs and 30 per cent foreigners is able to meet the quota with ease though Singaporeans remain in the minority. Some of these PRs will go on to compete with Singaporeans in other jobs after they leave their parent companies who apply the Singapore PRs on their behalfs. An electronic firm in Singapore was known to have applied Singapore PRs for its PRC workers who are unable to speak a single word of English. Surprisingly, most of their applications are approved within a year. The marketability of these PRC workers are therefore enhanced and they have few problems finding another job in Singapore after they left the company. The most incredible part of it all - these PRs are sent for "retraining" too under the Job Credits Scheme last year sponsored by Singapore taxpayers! Unless wholesale changes are made to Singapore's employment and immigration policies, the hike in Foreign Workers levy will not moderate or slow down the inflow of foreign workers into Singapore. Perhaps that's the real aim of the ruling party after all - to keep the foreign workers coming without jeopardizing its chances at the next general election.  Read More →