Key recommendations by business community for Singapore's economic future

The skyline of Singapore, as seen from the Jubilee Bridge.
The skyline of Singapore, as seen from the Jubilee Bridge. ST PHOTO: KUA CHEE SIONG

SINGAPORE - A new position paper released on Wednesday (Jan 6) outlines recommendations from the business community for Singapore's economic future. Released by the Singapore Business Federation (SBF), the report is backed by 28 trade associations and chambers and some 70 top-level executives.

Here are some of its key recommendations:

1. Identify key reasons for the sharp increase in business costs and study how to better manage them

The report calls on the Government to keep a close eye on costs and make sure that Singapore does not price itself out of the global market. These include manpower, lease and rental costs.

For instance, policymakers should consider reviewing land policies to reward the productive use of land, rather than ownership.

"Businesses desire to improve productivity but their efforts are thwarted by costs rising faster than productivity," the report said.

2. Review the foreign worker levy system

Companies say the levies no longer serve their original objectives but instead are only adding to costs, especially in labour-intensive sectors such as construction, retail, and food and beverage.

Foreign worker levies have been gradually raised in recent years as part of a suite of policies aimed at weaning companies off cheap foreign labour. Dependency ratio ceilings (DRC) - a quota setting the maximum number of foreign workers a firm can hire for every full-time local worker it employs - have also been gradually reduced across sectors.

"Businesses question the need for foreign worker levies, in addition to the quota stipulation, to regulate the number of foreign workers in Singapore when a more fundamental policy on the maximum number of foreign workers allowed here has already been established," the report said.

3. Grow local companies and encourage them to expand overseas with their home bases anchored here

More opportunities should be provided for local enterprises to participate in major Government procurement projects, the paper said.

Local firms should not be excluded from such projects solely on account of their limited experience.

The paper also calls for public agencies to lead the development of key industry sectors. "These public agencies should be empowered to help grow local enterprises beyond Singapore's geographical boundaries."

4. Make the securities market more vibrant and liquid; invest CPF funds in the local stock market

Singapore's stock market has not kept up with the country's status as a major financial centre, said the SBF's paper.

The market capitalisation of the country's stock market has not kept up with economic growth.The local bourse's market capitalisation was 248 per cent of the economy in 2005. This fell to 142 per cent of the economy in 2012.

"The sizes of other regional markets have all improved as a proportion to their GDP over this same period,"the report noted.

"More can be done to drive the churn, bring in more volumes and expand the pool of interested investors in our market."


For instance, retirement savings in Central Provident Fund (CPF) accounts can be invested in the local stock market.

"Currently, our CPF money is pooled with our other reserves and managed by GIC. Unlike other jurisdictions where their pension funds have provided strong support for their stock market, Singapore rides against the wave by specifically stating as a policy that the funds managed by GIC are to be invested abroad," the SBF said.

"The Government should consider separating the CPF component and managing it differently as how pension funds are managed. This will free these funds from the GIC investment restrictions and will likely result in some investments in the Singapore market. These investments will send strong signals on our market to other investment professionals."

CPF members currently receive a fixed interest rate on their CPF funds. The interest is paid out from Special Singapore Government Securities that are issued and guaranteed by the government.

GIC manages the CPF proceeds as well as other Government assets.

5. Deploy public scholarship holders to private enterprises

Public officers should also be actively rotated to the private sector, the paper said.

"The public officers who are rotated to the enterprises will have a better understanding of the sectors' concerns and value add to their growth."

6. Inculcate the right attitudes and values to the workforce through the education system

Companies are increasingly having to grapple with the poor attitude of Singapore's resident workforce.

"Businesses sense that our workers have developed a sense of entitlement and are becoming less engaged," the report said.

"This is an outcome of our own economic success. If this attitude is not corrected, it can lead to our diminished competitiveness.

"Around the region and indeed the world, providing jobs and employment are major challenges. Therefore, many are hungry and willing to take our lunches."