28 February 2013

SMEs ask govt to hold off on higher levies and quota cuts

Recommendations submitted to govt include doing away with S-Pass leviesSaid Chan Chong Beng, president of the Association of Small & Medium Enterprises (ASME) and chairman of SMEC's cost of doing business sub-committee: "We know that it is not possible for the government to reduce or stop levies, but we are just appealing to them not to further increase (the levies) and not to add an extra burden to the business community'' - PHOTO : SPH

'We are just appealing to them . . . not to add an extra burden.'
- ASME's Mr Chan

SMALL- and medium-sized enterprises (SMEs) here are pushing for the government to hold off plans to tighten the inflow of foreign manpower through levy increases and the lowering of quotas, despite repeated statements by the authorities that they will not turn back on their policy stance.

Among the key recommendations made by the SME Committee (SMEC) for the government's consideration in this year's Budget are a delay in any further tightening of manpower policies and increases to foreign worker levies, as well as the removal of S-Pass levies.

Said Chan Chong Beng, president of the Association of Small & Medium Enterprises (ASME) and chairman of SMEC's cost of doing business sub-committee: "We know that it is not possible for the government to reduce or stop levies, but we are just appealing to them not to further increase (the levies) and not to add an extra burden to the business community."

On the call for the government to do away with S-Pass levies, the SMEC said that these workers were already subject to the dependency ratio ceiling (DRC) quota and minimum salary requirements. The levy is therefore an "artificial layer of control that increases business costs", it said.

In total, the SMEC made 33 recommendations to the government covering five areas: cost of doing business; manpower and productivity; financing; internationalisation and market access; and innovation. The bulk of its recommendations concerned business costs and manpower and productivity issues, where it made 21 suggestions.

Some of the other proposals that it made on helping SMEs to reduce business costs include increasing the supply of more affordable generic, no-frills industrial facilities; and for the government to review its licensing requirements for businesses to reduce the complexity and cost of compliance.

On the issue of manpower and productivity, the SMEC made 12 recommendations, one of which urged the government to delay any further moves to tighten the manpower tap until firms start seeing productivity gains from their current efforts to up their game.

It also wanted incentive schemes that will encourage businesses to hire locals and rely less on foreigners.

Enhancements should also be made to the Productivity and Innovation Credit (PIC) scheme, said the SMEC. These include extending the benefits given to firms that send their employees for external training to in-house training activities; and reducing the restrictions placed on PIC cash payouts, especially for small businesses. In particular, the SMEC asked the government to relax the rule stating that SMEs must have at least three local employees before they can claim cash payouts - which will be particularly useful for the smaller firms.

Other recommendations include the setting up of a Working Capital Loan Scheme that could provide SMEs with loans of up to $5 million, and the setting of more competitive interest rates for government loan programmes.

The SMEC noted that the cost of borrowing under the government's Micro-Loan Programme (MLP), for instance, is higher than the Singapore Interbank Offered Rate (Sibor), which has been hovering at less than one per cent since the 2008 financial crisis. In contrast, interest rates for the MLP were at 5.5 per cent last year.

Said Lawrence Leow, chairman of the SMEC: "This year's recommendations go far beyond asking for immediate . . . measures to support SMEs - many are longer-term policy issues."

The government might therefore take more time to look into these recommendations, he added.

The committee has submitted its list to the government.

Minister of State for Trade and Industry Teo Ser Luck, who acts as adviser to the committee, said: "We have gone through some of the recommendations and find that there are practical ones that can be implemented, that can actually help the business sector."

The Business Times, 16 Jan 13)