Relax manpower rules to help firms with digital transformation: KPMG

"The cost of doing business here is very high and companies could find it very difficult to generate competitive yields that they might get in some other markets." - Kurt Wee, president of the Association of Small and Medium Enterprises (ASME)

Relax manpower rules to help firms with digital transformation: KPMG

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

The firm's recommendations for Budget 2018 include a suggestion to allow companies to hire more foreigners - especially in fast-growing tech segments such as cybersecurity 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 Singapore's 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 cybersecurity experts.

At the same time, companies should get tax incentives for training local employees in these skills.

KPMG's suggestions come on the back of similar calls from the Singapore Business Federation (SBF).

Having the right tech talent is essential to helping companies transform but it will take time to build up such a pool here, SBF chairman Teo Siong Seng and chief executive Ho Meng Kit said last week at the release of the federation's annual National Business Survey.

"Some of this manpower will have to be foreign. We should do a detailed study on skills shortages, and where we fall short, there should be some flexibility in manpower policy to bring in (foreign manpower) to train locals in a particular skill," Mr Ho had 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, noted Mr Chiu, and "boosting the number of government incentives and tax changes can accelerate this".

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

This is an issue especially for the large segment of SMEs which 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," he said.

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 into a bigger trade pie. Companies have to think of themselves as regional, or global, enterprises."

Expanding overseas could also help companies manage costs, Mr Wee said. "The cost of doing business here is very high and companies could find it very difficult to generate competitive yields that they might get in some other markets."

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