As the Covid-19 virus started to proliferate amongst the migrant worker dormitories in Singapore since March this year, we have seen many major works at construction sites and marine shipyards being put on hold. This has caused tremendous financial stress on firms in these sectors. Without being able to resume work and with high overheads, cash flow is a major concern, especially when payment is usually made progressively and dependent on completion milestones.
Foreign worker levies have been waived since April due to Covid-19 and Circuit Breaker measures, but payments are to resume as workers quarantined in dormitories are released back into the workforce. Many employers with workers living in the dormitories have asked for an extension of levy waivers for a few more months, citing that they cannot afford to resume payments for levies as most works are not resumed and there have not been any revenue.
On 1st August 2020, the Ministry of Manpower has announced the extension of waiver of foreign worker levies and will be giving out more rebates for firms particularly in the construction, marine shipyard and process sectors. Majority of the 15,000 firms in these sectors have been severely impacted by the Covid-19 pandemic, as they are unable to resume work due to the Covid-19 measures. With an extension of foreign worker levy rebates, this will help firms to defray some of their labour costs in face of financial difficulties.
An additional S$320 million will be set aside for the latest extension of the support package to cover the foreign worker levy rebates. This is on top of the S$1.36 billion Construction Support Package announced earlier on 27th June 2020.
Currently, all firms in these sectors have received a full waiver of foreign worker levies due in June, and a 50% waiver of levies due in July. Firms had also been given levy rebates for each work permit or S Pass holder at S$750 in June, and S$375 in July. For subsequent months of August and September, there will be a S$90 rebate for each work permit holder.
With the extension of the support schemes, firms will now get a full waiver for the levies due in July, August and September 2020. As firms in these sectors gradually resume activities, the levies waiver support will be reduced to 75% for levies due in October, followed by 50% for November and 25% for December. The S$375 levy rebate will also be extended for another two months to August and September, and the S$90 rebate will continue to pay out for the subsequent months from October 2020 to December 2021.
The foreign worker dormitories are expected to be fully cleared of Covid-19 this month and foreign workers are progressively allowed to resume work thereafter. Nonetheless, there are other concerns that most firms in the construction sector have pointed out. Given that workers are able to return to work, there will still be delays in payments from the main contractors for works done and this could mean zero income for several months even though works have resumed. In addition, safe distancing guidelines have to be adhered to, including having to keep 1m apart during transportation of workers to and from worksites. This means that there will be added costs for transport as workers have to be transported in small groups.
Is the extension of support schemes for foreign worker levies waiver and rebates sufficient?
Read also: COVID-19: Smart Towkay's Essential Business Survival Guide for this Pandemic
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