Singapore to lift local labour via S-Pass-DRC reduction

DRC has been lowered to 15% for the construction, marine shipyard, and process sectors.

Singapore continues to lessen its dependence on foreign workers, as a further reduction of the S-Pass-sub-dependency ratio ceiling has been announced for a number of sectors in the Singapore Budget 2020. 

Finance Minister Heng Swee Keat said that it will lower its S-Pass sub-DRCs for the construction, marine shipyard, and process sectors from 20% to now 15%. DRC for the services sector meanwhile, will be reduced from 38% to 40%.

Over the last two years, S-Pass holders from such sectors expanded by 3.8%, and is expected to further increase in the next two years upon the recovery of sectors, reiterated by Heng.

"S-Passes should not be a means for firms to hire low-cost foreign workers when qualified locals are available,” said Heng.

KPMG’s deputy head of tax, Ajay Kumar Sanageria said that the further reduction of the DRC reflects the government’s resilience amidst the current crisis, not resorting to the easy route of hiring foreign workers to meet manpower needs.

“The government does not lose sight of ensuring that productivity targets are not compromised. Whilst it is not going to be easy for such sectors, it is imperative for them to tap on the enhanced schemes announced in the budget,” said Sanageria.

Under the foreign worker policy, the levy rates for foreign workers within the Lean Development Scheme has been maintained at $300 for higher-skilled workers, and $450 for basic-skilled workers.

Deloitte’s tax partner and immigration leader, Christina Karl said that policies for foreign workers will continue to be under the government’s spotlight until they see a redressing of the workforce.