Work Passes Issued under Manpower for Strategic Economic Priorities Scheme

Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) how will the Ministry ensure the relevance of skills and employability of workers who are sent for training under Condition 2 of the M-SEP scheme; and (b) whether the required hiring and training under this scheme can have a greater focus and emphasis on mid-career PMETs.

Mr Patrick Tay Teck Guan asked the Minister for Trade and Industry (a) how will the M-SEP scheme benefit Singaporean PMEs and workers; and (b) what are the safeguards against abuse of work passes issued under this scheme.

Mr Desmond Choo asked the Minister for Trade and Industry (a) what is the projected impact of the M-SEP scheme on locals, in terms of wages and job opportunities; (b) what are the steps which the Ministry will be taking to ensure a level playing field for local workers; and (c) whether companies under investigation by the Ministry for poor employment practices or firms that have breached the Fair Consideration Framework, or the Tripartite Guidelines on Fair Employment Practices, will be eligible for the M-SEP scheme.

Mr Don Wee asked the Minister for Trade and Industry whether the Ministry will consider issuing additional S Passes and Work Permits under the M-SEP scheme for professional service providers like auditing entities which support the strategic economic priorities.

Mr Yip Hon Weng asked the Minister for Trade and Industry (a) what are the types of Singaporean workers who are affected by the new M-SEP scheme; (b) what is the Ministry doing to help these local workers affected by the M-SEP scheme in terms of retraining and employment facilitation; and (c) whether the renewal of work passes for foreign workers under the M-SEP scheme will continue under the same scheme after the two-year period, or fall under existing S Pass requirements.

Mr Edward Chia Bing Hui asked the Minister for Trade and Industry (a) how will the M-SEP scheme benefit local SMEs; and (b) whether the eligibility criteria to qualify can be looked into for SMEs in essential services that are experiencing a manpower crunch.

Mr Gerald Giam Yean Song asked the Minister for Trade and Industry regarding the introduction of the M-SEP scheme (a) what signal does the Ministry intend to send to companies with regard to their commitment to reduce dependence on low- and mid-skilled foreign workers; and (b) what impact will this have on companies' incentives to increase productivity through automation and develop a Singaporean Core in their workforce.

Thank you, Mr Speaker. Various Members have filed questions on the Manpower for Strategic Economic Priorities scheme, or the M-SEP scheme, which the Ministry of Trade and Industry (MTI) and the Ministry of Manpower (MOM) launched last month.

Members of the House, it is important for us to understand the intent of M-SEP. This scheme is designed to work in tandem with the various Government programmes that support Singapore's economic priorities. Firms that participate in these programmes contribute towards Singapore's competitiveness and generate economic opportunities for Singaporeans. M-SEP provides these firms with time-bound manpower flexibilities, should these firms require it. At the same time, these firms should also be taking steps to develop the local talent pipeline.

Specifically, the scheme gives qualifying firms the flexibility to temporarily hire S Pass and Work Permit holders above the prevailing Dependency Ratio Ceiling, or DRC, and S Pass sub-DRC.

To qualify, firms must participate in programmes or activities in line with one of the following key economic priorities, namely: one, investments that support Singapore's hub strategy; two, innovation or research and development (R&D); or three, internationalisation. These are important priorities for us to grow our economy and to create more economic opportunities for Singaporeans. We call this "Condition 1".

Since the flexibilities afforded are only temporary, firms will need to develop their local workforce to meet their longer-term needs. We want to ensure that these firms start expanding their local talent pipeline early. As such, firms must also commit to employ or train locals, while benefiting from the flexibilities. We call this "Condition 2".

Let me turn to the specific questions in the three groups. First, I will address questions on Condition 1; then on Condition 2; and lastly, questions which fall under neither category.

First, Condition 1, which is about our key economic priorities. Mr Liang Eng Hwa and Mr Patrick Tay have asked how the Ministry will safeguard against abuse of these work passes and ascertain that foreign workers hired under the M-SEP scheme will be deployed in areas that advance Singapore's economic goals. This is inherent in the design of Condition 1. The 16 programmes or activities under Condition 1 are specially selected to be in line with our economic priorities. In this way, M-SEP is selective in targeting firms or investments that will grow our economy, and also grow our competitiveness. To take part in these programmes, these firms would have worked closely with our economic agencies, like the Economic Development Board (EDB) or Enterprise Singapore (ESG). Only about 1,000 firms will meet the qualifying criteria. This represents less than 1% of all registered business entities in Singapore.

One example of a Condition 1 programme is Scale-Up SG. This is ESG's flagship programme to support local companies with high-growth potential to scale effectively and become leaders in their fields and future global champions. As these companies grow, they will contribute to Singapore's economy, create good jobs for Singaporeans and strengthen the Singapore brand.

Let me share with Members an example of a firm under Scale-Up SG. Last month, I visited Goldbell Engineering, which is the market leader in industrial vehicle leasing. They have the largest fleet in Singapore at over 8,500 units. They shared with me their ambitious plans to expand to other businesses, such as electric car-sharing with their acquisition of BlueSG and financial services.

ESG has worked with Goldbell for the last five years and is very familiar with Goldbell's plans. About 70% of Goldbell's 1,000-strong workforce are Singaporeans and Permanent Residents (PRs). For Goldbell, productivity improvement through upskilling and automation remains as the main solution to labour shortages, especially for blue-collar workers. As it pushes these transformation and growth plans, M-SEP will enable Goldbell to move fast to seize these opportunities with additional workers.

I am excited to see Goldbell and other such needle-moving firms make clear and deliberate efforts to expand, because I know this growth will create good opportunities for Singapore and Singaporeans. This is the archetype of firms which the M-SEP scheme is targeted at. Because this scheme has been designed to be highly selective at the firm level, there is no need to stipulate further criteria on the specific deployment of each individual worker hired under the M-SEP scheme. Such micromanagement would not be helpful for the firms.

Mr Edward Chia, Mr Liang Eng Hwa and Mr Don Wee asked if the whitelist of programmes under Condition 1 can be expanded to cover three other firm archetypes. Again, I must underscore that M-SEP will be selective and highly targeted, as I have just explained.

First, for small- and medium-sized enterprises (SMEs) and smaller companies. I would like to reassure Mr Liang Eng Hwa and Mr Edward Chia that such firms can already qualify for M-SEP, as long as they are participating in the programmes under Condition 1. For example, they can qualify if they take part in programmes, such as Scale-Up SG, which I described earlier, or if they successfully raise funds from recognised investment firms.

Next, outsourced service providers. We recognise that needle-moving firms will rely on an ecosystem of outsourced service providers, including professional services firms. However, we will not extend M-SEP to these outsourced service providers solely because of who their clients are. Instead, these outsourced service providers themselves need to be taking part in Condition 1 schemes in order for them to qualify for M-SEP.

Finally, the firms in the essential services. I would like to reassure Mr Edward Chia that there are other measures already in place to ensure that firms which provide essential services, like healthcare and the cleaning of public housing estates, have access to foreign manpower for essential functions.

Mr Gerald Giam also asked about the signals, as well as the incentives M-SEP is sending on automation and reliance on foreign workers. I hope that, as a result of the explanation, he can see and appreciate how M-SEP is about helping firms to create more opportunities for Singapore. In fact, some of the Condition 1 programmes are related not just to growth, but also to help firms become more productive at the same time, through innovation and internationalisation.

To reduce the reliance on large numbers of low- and mid-skilled foreign workers and continue in their automation journeys, firms will need to pivot and transform. And this is what Condition 1 is fundamentally about – to support our strategic economic priorities. To further assure the Member, M-SEP only provides time-limited support. So, even if a company uses additional foreign workers to transform initially, these flexibilities are time-limited and they will cease after the support period.

Coming to Condition 2, which is commitment to hiring and training locals. Mr Patrick Tay, Mr Desmond Choo and Mr Yip Hon Weng asked how this scheme will benefit local professionals, managers and executives (PMEs) and workers, whether there is any impact on local wages and job opportunities, and what the Government will do to level the playing field. Mr Gerald Giam also asked if this scheme affects firms' incentives to develop a Singaporean Core.

Even though Condition 1 is already highly selective to target growth opportunities for Singapore, we have devised and designed M-SEP to also have Condition 2. This condition requires firms to hire and train local workers to take on new jobs as these firms grow. M-SEP works alongside existing Government efforts to develop the local talent pipeline, including those under Workforce Singapore (WSG) and SkillsFuture Singapore (SSG).

To Mr Liang Eng Hwa's question, M-SEP is part of a range of initiatives to benefit a larger group of Singaporeans. Mid-career professionals, managers, executives and technicians (PMETs) will continue to benefit from existing Government programmes, such as Career Conversion Programmes (CCP), under WSG and the SkillsFuture Career Transition Programme (SCTP) under SSG. Where such programmes lead to a net increase in local hires, this can count towards meeting firms' Condition 2 commitments.

There are also other specific questions asked, about the design of Condition 2. Mr Shawn Huang, in a separate written Parliamentary Question and Mr Liang Eng Hwa asked how the Ministry will ensure that the training and hiring commitments under Condition 2 are adhered to, how they are conducted at the right level and whether they are efficacious and relevant.

Ultimately, these are firms that support our strategic economic priorities and which we have worked closely with. They know that if they succeed, they will need more local workers with the right skills, and it is good business sense to invest in the local talent pipeline while they move to seize new opportunities.

On hiring commitments, firms can choose to hire local workers through their own channels or through Government programmes, as long as these locals are paid above the Local Qualifying Salary (LQS) of $1,400. Such firms will need to achieve a net increase in local hires.

In this tight labour market that we have today, we are conscious that it is not realistic to expect all firms to meet these hiring criteria. As such, there is also an option for a firm to commit to train local workers to fulfil Condition 2. Firms can do so by sending their local workers to a whitelist of training programmes. These are established training programmes which have demonstrated good outcomes for participants in terms of enhancing their job roles and raising their wages.

For instance, WSG's Redeployment or Job Redesign Reskilling Career Conversion Programmes are whitelisted under Condition 2. These programmes allow firms to send workers for reskilling to take on redesigned and enhanced job roles. One specific example is the CCP for Infocomm Professionals (5G), which reskills Infocomm professionals to take on deep-tech, end-user and support roles relating to 5G networks and technologies.

Regardless of whether firms choose to meet Condition 2 through hiring or training commitments, all M-SEP firms will also need to minimally maintain their local workforce share during the M-SEP support period.

Finally, there is a third group of questions from various Members which neither falls under neither Conditions 1 nor 2.

To Mr Liang Eng Hwa's question, the number of additional S Passes and Work Permits to be issued will really depend on the take-up of M-SEP. While there are around 1,000 firms that are eligible under Condition 1, not all may require M-SEP support. On the other hand, the greater the take-up rate, the greater the eventual number of locals who would be hired or be trained. We will monitor the take-up rate closely and we will review the scheme accordingly.

To Mr Yip Hon Weng's question on the renewal process for work passes, additional work passes granted under the M-SEP scheme can be renewed as long as the firm has sufficient quota. This can be achieved if the firm successfully renews its M-SEP support by meeting the renewal conditions. Alternatively, the firm can hire more locals to unlock a higher mainstream foreign worker quota.

To Mr Desmond Choo's question, we take workplace fairness issues seriously. Firms that have breached the Fair Consideration Framework (FCF) or the Tripartite Guidelines on Fair Employment Practices (TGFEP) may be barred from work pass privileges and will not be able to benefit from M-SEP. Firms that are still undergoing investigations will be assessed on a case-by-case basis. As Members would be aware, we are taking a very significant step forward of enshrining the TGFEP in law and we will share more details in due course. We will take reference from the penalty framework of the new legislation when deciding on the treatment of such firms.

To conclude, Members of the House, manpower should not be a constraint to growth. What is most important is to ensure that Singaporeans can benefit from our economic priorities. M-SEP will do so in two ways: directly, through the creation of hiring or training opportunities; and more significantly, indirectly, through the growth of needle-moving companies which support our strategic economic priorities.

Designed with these principal objectives in mind, M-SEP will strengthen our competitiveness. The Government will continue to monitor the outcomes of the M-SEP scheme and will enable us to generate economic opportunities and provide better outcomes for Singaporeans.

Thank you, Mr Speaker. Sir, credit to MOM and MTI, and of course, Minister Tan See Leng for relentlessly working, improving and refreshing our framework, our schemes, to manage our foreign manpower needs. In the last one year, we now have more schemes – we have M-SEP, we have Overseas Networks & Expertise Pass (ONE Pass) and we have Complementarity Assessment Framework (COMPASS), which are all specific and targeted schemes by design, and understandably, it would also add a lot to the overall complexity of our foreign manpower management system. We have Condition 1 and Condition 2, and more and more to assess whether it can fit into that and other criteria.

Sir, I would like to ask the Minister, would MOM now need a bigger bureaucracy to administer these schemes? He mentioned that there are 1,000 companies eligible for M-SEP. And if 500 come to apply, and on top of the appeal cases, there will be a lot to manage as well.

Secondly and importantly, how does MOM guard against companies gaming and circumventing some of these qualifying criteria, or some of the commitments they have made to the schemes?

I thank the Member for his questions. We acknowledge that over the last one year, we have significant refinements in terms of our entire Employment Pass (EP) framework. In the process of rolling out COMPASS, the ONE Pass and now the M-SEP scheme, which we committed to in the last Committee of Supply (COS), we have ensured that the COMPASS scheme has been appropriately resourced, the departments are there to conduct the relevant checks, including sieving out potential cases of false salary declarations, where such declarations are needed. In addition, MOM also proactively identifies employers and work pass holders who flout or breach our rules. Some of them also get surfaced to us through whistle-blowers and the rest are detected either through audits or inspection. That covers a very broad framework.

On top of that, with the M-SEP scheme, with the ONE Pass, MOM also works with the different sector agencies. Just to name a few – through MTI, EDB, ESG, the Singapore Tourism Board (STB). We also work closely with with the Infocomm Media Development Authority (IMDA) and and Maritime and Port Authority of Singapore (MPA), and various other agencies including those under the Ministry of National Development (MND), to come up with the different areas where we sieve out, for the attractiveness of our economy, by getting top talents to come in. We work with these sector agencies to roll out some of these schemes ourselves.

So, thank you for the compliment. We have tweaked it based on some of the Parliamentary Questions that have been brought up and the feedback that we have gotten from the ground. We hope that we can collectively work in making sure that Singapore remains always at the top of the league tables, in terms of our competitiveness to the world.

Thank you, Speaker. I would like to ask the Minister, what are the evaluation and success metrics of this new M-SEP scheme, in terms of evaluating how effective and successful this scheme is. Second, if there are other local firms who may not be part of the Condition 1, but are able to meet these metrics, will the Ministry be open to listening to their appeals?

I thank Mr Edward Chia for his question. The key success factor for the M-SEP scheme are the economic outcomes. We are focusing on, under Condition 1, the three deliverables. One, in terms of our innovation, as a R&D hub. Second, investments into ensuring that we continue to become and maintain our status as a hub – not just in the region but globally. And the third thing is, how do we help these companies internationalise. These are very clear strategic economic priorities where we can ascertain clearly what the outcomes will be. I do not think we need to go into the granularity in terms of specific key results areas (KRAs) or key performance indicators (KPIs) concerned, because these are very broad overarching objectives.

With regard to helping and widening it for more SMEs, we are at a very early stage in terms of working with many of the firms. These 1,000 firms that we talked about, they are already very well known to the agencies that I mentioned earlier on – EDB, ESG, STB, IMDA, MPA, amongst others.

The plan is to ensure that with the in-depth knowledge of each one of these firms, as we roll out the scheme to see that direct benefit. Once we have a very clear path along the way – as the economy changes, as it restructures, as it transforms – we are not averse to rolling out to more firms. So long as they fit into that broad overarching objectives of improving our competitiveness and, at the same time, making sure that our locals continue to get adequately trained, adequately employed, and they have good career and wage progression. I hope that answers the question.

I thank the Minister for his reply. My supplementary question pertains to SMEs. Often, the SMEs will be in need of such foreign workers and only a small number of firms will meet the criteria for M-SEP. As such, how can we help SMEs? They are competing with the bigger companies to stay afloat and meet their manpower needs.

I thank the Member for his supplementary question. Indeed, in the initial step – which is quite a landmark step – the plan is to increase the number of training opportunities and the hiring opportunities for our locals. We believe that that would then directly transform into an increased trained pool of local talents for many of the SMEs to eventually be able to tap into.

Then, the indirect way is, M-SEP also works alongside our existing Government efforts to develop the local talents pipeline, including those under the WSG and SSG programmes. So, the CCP under the WSG, as well as the SCTP under SSG, train the locals for employment, including in high growth sectors, such as information and communications technology (ICT).

Some SMEs can already qualify for M-SEP, as long as they are participating in programmes under Condition 1. As I have shared earlier on, if they take part in programmes such as the Scale Up SG, which I had earlier described in my reply, or if they can successfully raise funds from recognised investment firms, these SMEs can also participate and benefit from the M-SEP scheme.

Like what they always say, "The journey of a thousand miles begins with the first step". This is the first few small steps that we have taken upon ourselves to move this forward. What we have incorporated in these small steps are a list of 16 policies that SMEs can look and see how they can leverage on these 16 policies and tap on them to move forward and be able to benefit from the scheme.

I hope that covers what the hon Member is asking.

Thank you, Mr Speaker, Sir. The first supplementary question to the hon Minister is, is the Government still planning to cap the ratio of foreign workers at one-third of the overall workforce and does the introduction of M-SEP puts us at risk of breaching that cap? The reason I ask this is because I think this cap of one-third of the workforce – which was alluded to in the Economic Strategies Report of 2010 – is something that has been affirmed at various points for quite some time; most recently, by Deputy Prime Minister Lawrence Wong in this House last year.

Secondly, of the 1,000 companies that are deemed to be eligible for M-SEP, and apologies if I missed this, what is the percentage that are foreign multinational corporation (MNCs) versus local enterprises?

And lastly, I think, when introducing M-SEP, the Government has previously taken the view that there will be no "U-turns", and this was made very clear to the business sector. So, does the introduction of M-SEP, which is giving companies extra foreign worker quota, amount to a "U-turn" in the Government's foreign manpower policies? Or how will the Government manage the risk that it will be seen by the business sector as a "U-turn" or as a sign that possibly in the future, the Government will "U-turn" and make some concessions on the foreign manpower policy, and therefore, lessen the drive to increase productivity and strengthen the Singapore Core, which is the acknowledged policy aim of the Government?

Mr Speaker, I thank Mr Leon for his five or six supplementary questions. Inherent in his three supplementary questions, the Member has a sub-numeral (a), (b) and (c); and then there is a roman numeral (i), (ii) and (iii). I would try to answer each one of them, but obviously because it is not a prepared written form, I will forget some parts. The Member can help me to "fill in" with those that I have not given an answer to.

I remember the first and the last part: the cap at one-third in terms of our workforce and this thing about whether there is a "U-turn".

What we have done in all of our workforce policies is to continue to make sure that the talent in the EP, as well as the S Pass segment continues to move up to the top, to be pegged to the top one-third of the wages of our Singaporean local talents.

In terms of capping the one-third, I think it really is a function of the needs of the economy. I do not think that it is at this particular point in time, for me – I need to go back and refer to the 2010 notes that the Member was talking about. I do not have the context of it with me at this particular point in time.

So, let me clarify – at least for the last one year in terms of whether it is the ONE Pass, COMPASS framework, raising the qualifying salary for EPs, and separating the EPs into the financial and non-financial part in terms of the qualifying salary, as well as the S Pass, it is meant to achieve that outcome over the next few years.

With regard to M-SEP, it is not a "U-turn". I have said before, under Condition 1, we live in a rapidly evolving, rapidly disrupting world today. There are significant opportunities for our country to continue to boost our competitiveness and to grasp these opportunities internationally, to continue to ensure that we not just maintain our hub status but to move ahead and pull ahead, and at the same time, significant opportunities for us to be able to tap into the R&D segment, for us to continue the pivot and transform ourselves.

Hence, the M-SEP scheme was conceived to capture this very, very tight space of the three specific economic priorities that I have shared very early on.

So, there is no "U-turn", we continue to nudge, we continue to persuade our companies to automate, we continue to persuade our companies to up the productivity and to increase the value-add. But in the process of getting there —

I thank the Minister for the assurance that companies with bad practices will not be allowed to participate. I would like to ask how nimble will the Ministry be in adjusting the number of foreign manpower admitted through this scheme, especially in light of a slowing economy and the possible increase in unemployment.

I thank the Member for his very stark reminder, the exhortation. Today, for this M-SEP scheme, we are working very closely with sector agencies. I have mentioned them and I do not want to I sound like a broken tape recorder: we are working very closely with EDB, ESG, IMDA, MPA and also STB.

And inherent within the sector agencies, these are companies that we have been in very close working relationships with. And so, I would say that as an extrapolation of that, they do have that finger on the pulse. So, to the Member's exhortation, indeed, that is also our concern. Hence, as we move forward, we are very ginger about it, in terms of how we approach the numbers. We will be very cautious and at the same time, very nimble in rolling out the scheme because we think that there is also some slowdown that we are experiencing moving into the quarters ahead.

Thank you, Speaker. Sir, one supplementary question. The few relevant M-SEP firms that I had chatted with are appreciative of this new scheme. They raised concerns that their professionals service providers, like the audit firms in the corporate secretaries which support their incorporation and growth, are also experiencing manpower challenges. Therefore, can MOM and MTI work with the Professional Services Programme office to include or to explore the inclusion of the accountancy sector into this scheme?

I thank the Member for his question. Let us have a good start in making sure that the M-SEP scheme is a success. Today, by extension, if you want to extend the M-SEP support scheme to audit firms, I think it would really be too broad-based and it may run counter to M-SEP, which is intended to be very highly selective. Today, audit firms and professional companies can work with WSG and SSG to see how we can help them to scale up our locals to meet their manpower needs. I hope that provides adequate reassurance to do the hon Member.

Speaker, I have heard over the last half an hour what the Minister had said about the various schemes that have been brought into the job market since the last one year. But I want to ask the Minister again: what exactly, specifically, is the process that MOM will adopt to ensure that the Singaporeans are really getting the jobs after the M-SEP scheme is introduced or, for that matter, all the other schemes?

For example, if there is no time limit, you employ a lot of foreigners, but there are no time limit to the foreigners, how do the Singaporeans take over the jobs eventually? Can you describe that process a bit more? This my first question.

The second question is that you have not answered our fellow Member Leon Perera's question on whether it is a "U-turn" or not. You say you have to check the past information, but if in the past there was a 30% cap on the foreigners, then if you say that that is not necessarily the ratio now – that, in fact, is a "U-turn", right?

And Member Leon Perera also asked about what is the percentage of Singaporean-owned firms within the 1,000 firms that you have pointed out just now.

I thank Mr Leong for his questions, but I think he probably did not capture the essence of what I was trying to tell him. It is strange because on the one hand, I think that Mr Leon Perera who had asked the question, does not seem to have an issue.

Just to set it into perspective, the 30% cap, that was not the context of how I addressed that there is no "U-turn". Because Mr Leon Perera's point about the "U-turn" was whether this M-SEP scheme would subsequently – in terms of raising the sub-DRC numbers, and also the work permit numbers above the prevailing quota – appear to be a "U-turn".

For the record, for the 30% ratio, we will continue to monitor this very closely. But the M-SEP, because of the very highly selective nature of the scheme and because of the stringent criteria that we have applied for Condition 1 and Condition 2, we do not expect, in the penultimate, the numbers to affect the proportion significantly. [Please refer to "Clarification by Second Minister for Trade and Industry", Official Report, 9 January 2023, Vol 95, Issue 79, Correction by Written Statement section.]

Please remember, Mr Leong, that the M-SEP is here to help us generate more economic opportunities for Singaporeans, because in the second condition, it is about making sure that there are more training opportunities for Singaporeans and the jobs for Singaporeans. So, do not look at it in isolation.

The first condition is about our hub status, about our investments in R&D and about how we internationalise our operations. But the second condition, Condition 2, is about the employment and the employability of our locals and the training of our locals.

Today, we live in a rapidly changing and rapidly disrupting world. So, how nimbly we are able to allocate our manpower resources – this will be critical to our success. In terms of our commitments, we will continue to track them. Our economic agencies also work with these companies under the programme.

And I think that maybe you are not paying attention to what I have said. I said that there is a time limit to M-SEP. It is not indefinite.