[h=2]SBF to Govt: Remove S-Pass levies for foreign PMETs[/h]
January 7th, 2015 |
Author: Editorial
The Singapore Business Federation (SBF) has submitted a paper to the government today (7 Jan), ahead of Budget Day which has been scheduled on 23 Feb.
In the paper, SBF said they surveyed close to 1,000 companies with 62% said they are most concerned of business costs and 91% said they have been affected by economic restructuring.
In particular, SBF wants levies for S-Pass holders (i.e, mid-level skilled foreign PMETs) removed as well as government to hold back the planned increases in levies for work permit holders.
SBF said that levies have artificially inflated costs for many players. Since S-Pass holders are already subject to dependency ratio ceilings and minimum salary requirements, employers should not have to pay levies for hiring them, it said.
Mr Lawrence Leow, chairman of the SME committee at the federation, said, “The government’s original intention is to ensure that we do not pay Singaporeans a lower salary because we can tap on a cheaper source. Now these levies are no longer relevant, with Singaporeans at full employment. I am also not hearing that Singaporeans are being underpaid.”
The paper also listed other recommendations for Budget 2015.
For example, it also urged the government to extend the Productivity and Innovation Credit (PIC) Bonus for another three years to 2018, to coincide with the extension of the PIC scheme.
Companies circumventing minimum salary requirements
Removing the S-Pass levies, of course, will make foreign PMETs even more attractive to be hired. Presently, S-Pass holders must be paid a minimum $2,200 per month and levies of $315 (up to 10% of total workforce) or $550 (if exceeds 10% of total workforce) [Link].
However, some companies do try to circumvent the minimum salary requirment by actually paying their foreign PMETs lower than the stipulated $2,200.
Last year, MOM charged 22 foreign workers, all from India, for falsely declaring their salary on their work permit applications. These workers were employed by four 7-Eleven franchisees – Vina Trading, Manthra Enterprises, Magnaton Ventures and Nalla Traders.
Whilst these employees declared salaries ranging from $2,400 and $4,550, following receipt of their stated salary via GIRO, they were required to return to their employers between $600 and $3,350, in cash. The actual salaries of these workers, in most cases, works out to be about a quarter of the amount declared on their work permit applications.
In this scam, employers not only hire workers at dirt-cheap wages, they pay lower corporate taxes as a result of declaring higher expenses while lining their pockets with freshly laundered tax-free money.
Since the floodgates opened to foreign workers, this has been a common scam with small businesses, HR companies specializing in foreign workers, and workers from third-world countries – where the culture of bribes and kick-backs in the job market are the norm – all colluding to defraud the government and Singaporeans.
There have also been reports on alternative media that even some private clinics engage in such scam in the hiring of foreign nurses or clinic assistants.
Hence, a combination of rising business costs (due to ever-increasing rents), availability of cheap regional labour, and a lax enforcement regime has contributed to the climate that makes such salary scam so tempting.
Perhaps the most bizarre aspect of the whole matter is that MOM actually approved work permit applications for the 7-Eleven jobs with job titles like “Store Manager”, “Senior Store Manager”, “Customer Service Manager” and “Business Development Manager” and these jobs purportedly listed a salary above $4,000 a month. Are MOM officials so out of touch with reality to believe in this sort of salary for essentially a store attendant in a small 7-Eleven shop? Did they not wonder why these franchisees are hiring from abroad for jobs that Singaporeans would be competing for given the attractive remuneration?
Who runs SBF?
SBF is currently run by CEO Ho Meng Kit.
Mr Ho was the Deputy Secretary of the Ministry of Foreign Affairs. He opted for early retirement from the Civil Service to join the SBF.
He has held a variety of senior policy and executive positions including four years as Principal Private Secretary to then Senior Minister Lee Kuan Yew.
He was Chief Executive of the Singapore Broadcasting Authority and Land Transport Authority where he worked collaboratively with Singapore’s media, transport and construction industries.
As Managing Director of the Economic Development Board, he has extensive exposure to corporations, their business challenges and the opportunities they seek.
As Deputy Secretary in MTI and later in MFA where he is also Singapore’s Senior Official for Asia-Pacific Economic Cooperation (APEC), Mr Ho has an excellent understanding of government policies particularly those relating to support for businesses.
Mr Ho has a degree in Engineering from Cambridge University.
In the paper, SBF said they surveyed close to 1,000 companies with 62% said they are most concerned of business costs and 91% said they have been affected by economic restructuring.
In particular, SBF wants levies for S-Pass holders (i.e, mid-level skilled foreign PMETs) removed as well as government to hold back the planned increases in levies for work permit holders.
SBF said that levies have artificially inflated costs for many players. Since S-Pass holders are already subject to dependency ratio ceilings and minimum salary requirements, employers should not have to pay levies for hiring them, it said.
Mr Lawrence Leow, chairman of the SME committee at the federation, said, “The government’s original intention is to ensure that we do not pay Singaporeans a lower salary because we can tap on a cheaper source. Now these levies are no longer relevant, with Singaporeans at full employment. I am also not hearing that Singaporeans are being underpaid.”
The paper also listed other recommendations for Budget 2015.
For example, it also urged the government to extend the Productivity and Innovation Credit (PIC) Bonus for another three years to 2018, to coincide with the extension of the PIC scheme.
Companies circumventing minimum salary requirements
Removing the S-Pass levies, of course, will make foreign PMETs even more attractive to be hired. Presently, S-Pass holders must be paid a minimum $2,200 per month and levies of $315 (up to 10% of total workforce) or $550 (if exceeds 10% of total workforce) [Link].
However, some companies do try to circumvent the minimum salary requirment by actually paying their foreign PMETs lower than the stipulated $2,200.
Last year, MOM charged 22 foreign workers, all from India, for falsely declaring their salary on their work permit applications. These workers were employed by four 7-Eleven franchisees – Vina Trading, Manthra Enterprises, Magnaton Ventures and Nalla Traders.
Whilst these employees declared salaries ranging from $2,400 and $4,550, following receipt of their stated salary via GIRO, they were required to return to their employers between $600 and $3,350, in cash. The actual salaries of these workers, in most cases, works out to be about a quarter of the amount declared on their work permit applications.
In this scam, employers not only hire workers at dirt-cheap wages, they pay lower corporate taxes as a result of declaring higher expenses while lining their pockets with freshly laundered tax-free money.
Since the floodgates opened to foreign workers, this has been a common scam with small businesses, HR companies specializing in foreign workers, and workers from third-world countries – where the culture of bribes and kick-backs in the job market are the norm – all colluding to defraud the government and Singaporeans.
There have also been reports on alternative media that even some private clinics engage in such scam in the hiring of foreign nurses or clinic assistants.
Hence, a combination of rising business costs (due to ever-increasing rents), availability of cheap regional labour, and a lax enforcement regime has contributed to the climate that makes such salary scam so tempting.
Perhaps the most bizarre aspect of the whole matter is that MOM actually approved work permit applications for the 7-Eleven jobs with job titles like “Store Manager”, “Senior Store Manager”, “Customer Service Manager” and “Business Development Manager” and these jobs purportedly listed a salary above $4,000 a month. Are MOM officials so out of touch with reality to believe in this sort of salary for essentially a store attendant in a small 7-Eleven shop? Did they not wonder why these franchisees are hiring from abroad for jobs that Singaporeans would be competing for given the attractive remuneration?
Who runs SBF?
SBF is currently run by CEO Ho Meng Kit.
Mr Ho was the Deputy Secretary of the Ministry of Foreign Affairs. He opted for early retirement from the Civil Service to join the SBF.
He has held a variety of senior policy and executive positions including four years as Principal Private Secretary to then Senior Minister Lee Kuan Yew.
He was Chief Executive of the Singapore Broadcasting Authority and Land Transport Authority where he worked collaboratively with Singapore’s media, transport and construction industries.
As Managing Director of the Economic Development Board, he has extensive exposure to corporations, their business challenges and the opportunities they seek.
As Deputy Secretary in MTI and later in MFA where he is also Singapore’s Senior Official for Asia-Pacific Economic Cooperation (APEC), Mr Ho has an excellent understanding of government policies particularly those relating to support for businesses.
Mr Ho has a degree in Engineering from Cambridge University.
