Singapore should tighten policies on foreign workers in the city-state to ensure their number does not grow significantly from current levels, a committee led by Finance Minister Tharman Shanmugaratnam recommended today.

The committee also said Singapore should set up a financial institution similar to an export-import bank to help domestic firms expand abroad. 

“We cannot increase the number of foreign workers as liberally as we did over the last decade, or else we will run up against real physical and social limits,” the government’s economic strategies committee said in a report. 

“This will also ensure that our economy’s dependence on the foreign workforce over the long term does not grow significantly beyond current levels of about one-third of the total workforce.”

Manpower Minister Gan Kim Yong, another member of the committee, told a media briefing: "We want to maintain the current balance as it is, which is about one-third." 

Singapore set up the committee in May 2009 at the height of the city-state's worst-ever recession to come up with strategies to help it grow in coming years. 

Its key recommendations have already been accepted by the government and will be debated during the upcoming budget on Feb 22.

The committee, which was chaired by the finance minister, includes several other government ministers as well as top private sector executives such as Procter & Gamble’s (PG.N) group president for Asia, Deborah Henretta.

Given the large proportion of foreigners in Singapore, policies affecting immigration and the ease with which companies can hire people from outside could impact economic growth, wages and domestic demand for goods, services and housing, the committee’s report said. 

The report did not give a specific recommendation for the size of the foreign worker levy increase. 

The committee's other recommendations included keeping manufacturing's share of GDP at 20-25% by emphasising higher value-added goods, raising productivity growth to 2-3% per annum from 1% in the last decade, and making Singapore attractive to companies and skilled individuals from abroad. 

It added that there was a shortage of trade and project finance in the financial system and recommended the setting up of a specialist financial institution that would function like a export-import (EXIM) bank or export credit agency. 

DBS Group (DBSM.SI), Singapore's largest bank by assets, was originally a development bank but it has since evolved into a commercial lender that dabbles in investment banking and competes with other local banks in areas such as mortgage finance.