Relax manpower rules to help firms go digital: KPMG

Its proposals include letting firms hire more foreigners and beefing up tax incentives

Professional services firm KPMG has joined a growing chorus calling for more flexible manpower policies to help companies go digital.

The firm's Budget recommendations include a suggestion to allow firms to hire more foreigners - especially in fast-growing sectors such as cyber security and data analytics.

These suggestions come amid mounting concerns about a shortage of tech talent here, even as companies are being urged to ramp up their digital transformation efforts.

KPMG said manpower policies can be tweaked to meet the needs of companies keen on investing in cutting-edge digital technologies.

For instance, the Employment Pass framework could be relaxed to encourage firms to bring in foreign talent with key skills, such as cyber security experts.

At the same time, firms should get tax incentives for training locals in these skills, KPMG said.

There have been similar calls from the Singapore Business Federation (SBF).

SBF chairman Teo Siong Seng and chief executive Ho Meng Kit said last week that having the right tech talent is essential to helping companies transform, but it will take time to build up such a pool here. "Some of this manpower will have to be foreign. We should do a detailed study on skills shortages, and... there should be some flexibility in manpower policy to bring in (foreign manpower) to train locals in a particular skill," Mr Ho said.

KPMG's proposals for the Budget - which will be delivered on Feb 19 - also include calls for tax incentive schemes to be enhanced and extended to encourage businesses to digitise as well as invest in research and development (R&D).

If these tax incentives are not beefed up, Singapore could become one of the least attractive countries in the world to undertake R&D after the popular Productivity and Innovation Credit (PIC) scheme expires this year, KPMG noted.

"We are not asking for the PIC to be extended," said KPMG head of tax Chiu Wu Hong, adding that the firm is instead calling for a more targeted approach.

There is increasing urgency for companies to transform and take advantage of technology, he noted, and "boosting the number of government incentives and tax changes can accelerate this".

Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said many smaller firms remain reluctant to invest in costly R&D.

This is an issue especially for the large segment of SMEs that focus mainly on the domestic market. "When you want to invest in innovation, you have to pay for it. But more importantly, the business also has to sustain and pay for that over time," noted Mr Wee.

This means innovation and digitalisation are most effective when the company is also making efforts to venture abroad.

"It is only through internationalisation that companies can tap a bigger trade pie. Companies have to think of themselves as regional, or global, enterprises," said Mr Wee.

Expanding overseas could also help firms manage costs, he added.

A version of this article appeared in the print edition of The Straits Times on January 17, 2018, with the headline 'Relax manpower rules to help firms go digital: KPMG'. Print Edition | Subscribe