Foreign worker levy hikes will finally be scrapped in Budget 2016, says BofAML

To combat escalating economic woes.

Singapore’s policymakers are expected to phase out the scheduled increases to foreign worker levies in Budget 2016, according to a report by Bank of America Merrill Lynch.

The levy hike which was scheduled for 2015 has been moved to 2016-2017 in the Jubilee Budget, in a bid to help businesses cope with the effects of restructuring. Now, as economic conditions deteriorate further, BofAML noted that the increases are likely to be scrapped entirely.

“We believe these levy increases will be abolished altogether, given worsening economic conditions. Businesses are hoping for more help, after being somewhat neglected over the past few years (in favor of social goals). Focus will be on whether Minister Heng remains left-of-center and be more responsive to businesses,” BofAML economist Hak Bin Chua said.

However, Budget 2016 is unlikely to unwind property measures.

“New National Development Minister, Lawrence Wong, recently commented that it is ‘too early’ to relax the property market cooling measures, as doing so could lead to a market rebound. Property prices have been falling for three consecutive years with transactions having collapsed by more than 70% from the peak. Focus will be on whether Minister Heng remains left-of-center and be more responsive to businesses. We do not have high expectations for Budget 2016 to have a material impact on growth or markets,” said the report.

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