Tighter foreign worker policies will put pressure on
companies
By Wong Siew Ying | Posted: 01
March 2013 2208 hrs
SINGAPORE : The government has recently tightened
foreign worker policies further with more focus on the
construction, marine and services sectors.
Economists warn that the foreign labour curbs could hurt the
Singapore economy if these companies cannot raise productivity in
the short-term.
With the manufacturing sector weighed down by weaker electronics
demand， industries such as construction, marine and services have
been and will continue to be important growth drivers of
Singapore's economy.
The services sector， for instance, contributes 70 percent of
Singapore's GDP.
Some economists are concerned that the tighter foreign labour
policies in 2014 and 2015 could put a drag on these sectors even as
regional growth momentum picks up.
Irvin Seah, Senior Economist, DBS Bank, says: "These sectors should
perform better. But that said, growth performance would have been
even better if there is no such tightening measures in place,
unless of course those sectors are able to raise their productivity
in the near-term to offset the drag from the tightening measures.
For example, Singapore could easily have achieved GDP growth of at
least 3 percent and above last year if not for those tightening
measures."
Singapore's GDP grew by 1.3 percent in 2012.
This year, economists project growth to come in at the higher-end
of the government's estimates of between 1 and 3 percent.
CIMB expects the construction, marine and services sectors to see
at least a modest growth this year.
But as stricter foreign labour curbs kick in, companies will
increasingly need to raise productivity to drive their
bottomline.
Song Seng Wun, Regional Economist, CIMB, says: "Singapore is
looking at restructuring not just domestically. We are also well
aware that the push for productivity is strong because regionally
wages are going up. If we don't force it upon local businesses
first, we might find businesses may struggle as competition for
labour intensify in the coming years."
Some economists say the risk of a global downturn this year is low
and this is a good time for businesses to restructure their
operations in an environment of growth.
However, should external demand softens due to any unforeseen
event, then companies may face more pressure and business failures
could increase.
Apart from raising productivity, economists say companies can also
explore opportunities in regional markets with lower cost
structure.
- CNA/ch
