From a fund-raising and tax perspective, Singapore holding company structures have become popular for startups, such as Flipkart. However, even a simple deputation to a Singapore entity now means more paperwork, higher costs and a longer processing period.
Singapore’s ministry of manpower (MoM) looks into the sponsoring company’s recruitment process. Hiring statistics are to be included with each work visa form for skilled employees. The details required are the number of Singapore citizens, permanent residents (non-Singaporeans having permanent right to stay) and foreigners in the four distinct phases in a job application process like applications received, interviews conducted, offers made and final hire figures.
While advertising in a designated job database to access local Singapore talent was a protectionist measure introduced a few years ago under the ‘Fair Consideration Framework’, its ambit has now been broadened. Many of these steps are against the Free Trade Agreement (FTA), say immigration and industry experts.
Skilled foreign professionals can work in Singapore under an ‘Employment Pass’ (EP), which is a work visa. They need to have acceptable qualifications and be paid at least 3,600 Singapore dollars (S$) per month, which translates into Rs 1.6 lakh approximately. The minimum salary threshold has been increasing over the years. In 2014, it was S$3,300 per month. Most Indians are sponsored by their employer under the EP route.
The S-pass is another route available for mid-level skilled staff. Here, the salary threshold stands increased from January 1, 2019 to S$2,300 per month (or Rs 1 lakh approximately) from the current S$2,200 per month.
From July 1, 2018, the 14-day job posting requirement for EP applicants will be expanded to cover companies with at least 10 employees or positions earning less than S$15,000 a month.
Fragomen, a global firm specialising in immigration laws, states, “Since currently, only companies with more than 25 employees or positions paying a fixed monthly salary of less than S$12,000 per month, were required to post a job advertisement for positions offered to EP applicants, the new rule will require more companies to adhere to the pre-EP application steps.” This requirement is expected to hit hard smaller entities, such as startups, which have a tiny presence in Singapore.
Gagan Sabharwal, senior director, Global Trade Development at Nasscom, says, “A qualifier on the MoM website suggests that intracompany transfers under trade treaties would be exempt from mandatory advertising. But, it further states that it would be preferred if they still went through the advertising route, which makes it more or less mandatory. By forcing Indian companies to take the labour-market test, Singapore violates the FTA principle.”
“Singapore has committed under the Comprehensive Economic Cooperation Agreement to facilitate movement of skilled workers in the Information Communications Technology (ICT) domain for short durations. However, there is no separate visa category available for this purpose and Indian ICT companies have to apply for EPs. Consequentially measures such as mandatory advertisement apply even to movement of skilled ICT employees,” he explains.
In addition to providing hiring statistics, in each EP application, the sponsoring employer needs to answer whether or not the employer searched for local candidates using recruitment methods and tools other than via the designated job bank and details in this regard are to be provided.
“MOM continues to ask employers for commitments on measures taken to further improve the local to expat ratio. They have denied applications if they perceived a lack of commitment,” says Sabharwal .
As of June last year, nearly 2 lakh foreign workers held an EP. The Singapore authorities do not provide a break-up of the nationalities of foreign workers, but industry experts peg the number of Indians to be less than 10,000. “We’ve seen work permit issuance was down by 50-80% in 2017, as compared to 2015. Indications are that the work permit issuance has increased since then, but it’s difficult to comment by how much,” says Sabharwal.
Source: Economic Times