Parliament: Firms in service sector need a complete re-think as foreign worker quotas cut further, say MPs

The Dependency Ratio Ceiling, which sets the proportion of foreigners on work permits or S Passes that a company can employ, will be cut from 40 per cent to 38 per cent next year, and to 35 per cent in 2021.
The Dependency Ratio Ceiling, which sets the proportion of foreigners on work permits or S Passes that a company can employ, will be cut from 40 per cent to 38 per cent next year, and to 35 per cent in 2021.PHOTO: ST FILE

SINGAPORE - As foreign manpower quotas tighten for the service industry in the coming years, business owners need to re-think how business is done beyond just adopting technology and automation, said MPs in Parliament on Tuesday (Feb 26).

They also called for more support to help firms digitalise and restructure their business, even as the swathe of pro-business measures announced last week in the Budget statement will help corporations cope with an expected bleaker economic environment this year.

The Dependency Ratio Ceiling, which sets the proportion of foreigners on work permits or S Passes that a company can employ, will be cut from 40 per cent to 38 per cent next year, and to 35 per cent in 2021. Similarly, the S Pass workers quota will shrink from 15 per cent to 13 per cent next year and then to 10 per cent in 2021.

Unlike in construction and manufacturing, Ms Denise Phua (Jalan Besar GRC) said, the service sector has not benefited in the same way from automation and digitalisation efforts.

The new foreign worker ceiling will likely hit the hospitality, food and beverage, arts, entertainment and other lifestyle sectors most, she added.

Ms Phua cited the predicament of Cube Boutique Hotel, whose owner Benedict Choa had adopted an innovative hotel model, automated its check-in system and worked with government agencies to transform some of its processes.

"Ben is all ready to employ any local staff willing to work, if he can only find them," she added.

 
 
 
 

How can the Government help such companies that are aligned with the national direction, yet still face manpower challenges, Ms Phua asked.

Another challenge for the service sector is the risk arising from the use of technology, said Ms Jessica Tan (East Coast GRC), as technology can reduce the human touch, personal service and customer experience.

But at the same time, if companies in the service sector do not rely less on foreign manpower, they will suffer more when the sources of foreign manpower dry up, said Ms Tan.

She acknowledged that it is painful and difficult but noted that doing more of the same is not the way to go.

"It's also not about just innovating and applying technology and automation. It requires re-thinking of our business and how work is done," said Ms Tan.

She held up local coffee kiosk Kopi Ong, which worked with a solutions provider to introduce a system that allows customers to order customised coffee or tea via a messaging app, and pick their drinks up when they are ready.

The company used technology to make it easier for staff to plan the work, provide customised service, achieve greater sales and reduce the need for more manpower or more shop space to cater for long queues, said Ms Tan.

"It's not just about technology, it's not just about the way we do business. It's not just about people and skills, it's all of them," she said. "Therefore, the support that's in place needs to do that."

To this end, MPs said measures in Budget 2019 will support these ambitions, especially of small and medium-sized enterprises (SMEs) seeking growth opportunities here and abroad.

Mr Darryl David (Ang Mo Kio GRC) said schemes like the SME Co-Investing Fund III and the Enterprise Financing System will help SMEs get public and private funding and gain the much-needed liquidity to import the latest technology, grow their businesses and possibly spread their wings beyond Singapore.

Agreeing, Mr Liang Eng Hwa (Holland-Bukit Timah GRC) said companies can thrive only if they scale up and try new approaches to grow.

He highlighted the Scale-up SG programme as "a bold move" to help fast track growth for promising enterprises.

But he questioned the scale and implementation of the programme. Will it involve "picking winners" among all companies, and will it work separately from existing industry transformation efforts that have been ongoing since 2016?.

"How do we eventually expand or scale up the Scale-Up SG to move the needle for the economy?" said Mr Liang, who chairs the Government Parliamentary Committee for Finance and Trade and Industry.

Ms Foo Mee Har (West Coast GRC), on the other hand, asked for pro-business support to be more selective.

"We should focus our support on start-ups in deep-tech with research-based intellectual property at its core rather than just general start-ups, especially on start-ups with the potential to scale globally," she said, suggesting that funding strategies should help research institutes and universities partner companies to solve problems.

"The reward system for our researchers and academics should provide motivations to help supercharge commercialisation of research and development, and industry applications," she said.