SINGAPORE (Apr 7): Singapore’s construction, shipyard and healthcare companies could see some relief from foreign worker levy rebates announced Monday as part of the Solidarity Budget.

But market watchers believe the relief measures will do little to help save Singapore from facing the worst-ever retrenchments in its 55 year history.

Deputy Prime Minister and Finance Minister Heng Swee Keat on April 6 announced a third round of relief measures to help mitigate the impact of the Covid-19 pandemic.

Specifically, the $5.1 billion Solidarity Budget is aimed at tiding the city state through a month-long “circuit breaker” period, which kicked off today.

All non-essential business activities have been ordered to be suspended until May 4, as Singapore struggles to curb the rise of local coronavirus infections.

To ease the load on firms that hire foreign workers on work permits and S-passes, the monthly foreign worker levy due in April will be waived.

Employers will also receive a foreign worker levy rebate of $750 for each work permit or S pass holder, based on previous levies paid.

The way DBS Group Research analyst Yeo Kee Yan sees it, the rebates will provide relief for sectors that employ a sizeable number of foreign workers, such as construction, shipyards, and healthcare.

Some SGX-listed names that could benefit include SembCorp Marine, Keppel Corp, and Raffles Medical Group, Yeo says.

Lim Siew Khee, an analyst at CGS-CIMB Research, estimates that SembMarine and Keppel Corp could see cost savings of around $7 million and $5.5 million respectively from the foreign worker levy rebates.

Meanwhile, she estimates that the Solidarity Budget could help engineering and construction company Yongnam Holdings as well as prefabricated steel reinforcement firm BRC Asia to cost savings of $2 million and $1.5 million respectively.

In his speech in Parliament on Monday, Heng said that the foreign worker levy rebates are intended to help firms reduce their cost and relieve the pressures on their cash flow.

He added that this will also enable them to preserve their business structure and quickly resume operations when the crisis is over.

However, Maybank Kim Eng lead analyst Chua Hak Bin believes waiving the foreign worker levy for one month may not be sufficient for many firms to retain their foreign workers.

“Government’s financial support is targeted at saving jobs for locals, while firms with larger share of foreign workers will receive far less,” Chua says, noting that there are some 1.2 million S-Pass and Work Permit holders in Singapore.

“Job losses will likely spike to about 150,000-200,000 for the full year, with services bearing the brunt,” he adds.

The way he sees it, foreign workers will account for more than half of the job losses.

“This will be the highest retrenchments in Singapore’s history since independence – far worse than during the global financial crisis or Asian financial crisis,” Chua says. He estimates that some 40,000 jobs were lost during the GFC in 2008/2009, while 30,000 were laid off during the AFC in 1998.

While noting that the impact on unemployment would be far worse with the three rounds of Covid-19 relief measures totalling $59.9 billion, he forecasts that unemployment rate will spike to above 5% – higher than the 4.1% seen during GFC and 4.5% during the SARS outbreak in 2003.