Can Singapore wean itself off cheap foreign labour?

Singapore has room to wean itself away from reliance on cheap foreign labour in construction and other industries, top local businessman and hotel magnate Ho Kwon Ping said in an interview on Tuesday.

"I think we have a dichotomous society," said Ho, who was recently voted as the country's most influential thinker in Yahoo!'s Singapore 9 project. "In the high knowledge-based industries we are competitive, but in the local industries such as construction, skill levels and productivity are quite low."

However, the founder and executive chairman of Singapore-listed Banyan Tree Holdings was also quick to caution against Singaporeans turning "xenophobic".

Ho was speaking to Yahoo! Singapore about his reactions to the National Day Rally Speech of Prime Minister Lee Hsien Loong, freedom of speech in the Internet age and the competitiveness of Singaporeans.

Renowned for launching the Banyan Tree global chain of luxury spa and hotel resorts from a single troubled hotel in Phuket that his family built, and having once owned a construction business, the 59-year old understands the construction industry very well.

Ho noted that in Australia, a builder gets a salary several times the salary of a construction worker in Singapore, although both countries have about the same per capita income.

"We've had construction development experience in Australia, New Zealand, Thailand and so on. When we built our hotel in New Zealand we were shocked because the number of workers we engaged there was about 10 percent of what we would get in Thailand -- because they are well trained," he said.

"We haven't bitten the bullet here. We are still addicted to cheap foreign labour in industries like construction," Ho pointed out.

"Our low-skilled workers are at a disadvantage today because salaries are quite low with the influx of foreign workers, so I think we need to ratchet that up a bit," he added.

He recalled that in the 1980s, Singapore was a low-cost, low-wage economy, but the government then pushed wages up high. That prompted many low-cost industries to leave the country, but the policy also attracted younger Singaporeans to join higher technology industries.

Now, the phenomenon of several thousand semi-skilled young women from Malaysia working at electronics factories in Singapore is gone, and, as PM Lee cited in his speech, the city-state can now produce the machines that manufacture semi-conductors, Ho noted.

The executive stressed that he is not saying Singapore should close off the construction industry to foreigners but that the costs and skill levels for workers should be raised.

"If you are a foreigner, if you have XYZ skills, you should be allowed in, but we should phase out the unskilled labourers, largely from South Asia," he said. "There will be transitional pains and should be phased over even a decade, but we must have targets so that our firms can prepare themselves."

Reactions to PM Lee's speech

Touching on the government's plan to raise the bar for employment passes, Ho said the move would bring temporary relief to Singaporeans, but the longer-term answer would lie in making citizens more competitive and productive.

"I think the policies announced in the National Day Rally are very responsible because they have responded to the sentiments on the ground -- and if they did not it would have smacked of arrogance -- but at the same time they did not give in to populism," said Ho, who is married to former Nominated Member of Parliament and prominent businesswoman Claire Chiang.

Regarding the 'Singaporeans-first' policies unveiled in housing and education, he noted that the PM has had to tread a very thin line on the "explosive" issue of foreigners, which many political leaders around the world have to grapple with.

"Any serious person will tell you that the advanced economies are not going to be able to grow or be able to get the talent they need if they are going to listen to the purely populist notion of protecting your people only," he said.

"On the other hand, you have to be aware of populist sentiments and make people feel their concerns are being addressed," he pointed out.

He agreed that issues such as overcrowding on buses and trains need to be tackled and corresponding policies rectified.

Nevertheless, Ho, who is also chairman of Singapore Management University, the country's third national university, warned that it is "very necessary for Singaporeans not to be xenophobic".

His view is that diversity in itself is a plus point and benefits everyone, including the majority. "If SMU students did not have the benefit of foreign students, they would be such a narrow bunch of people," he said.

In his NDR speech, PM Lee said that places for Singaporeans students at local universities would be raised by 2,000, the equivalent of another SMU, by 2015.

There is currently a 20 per cent quota of foreign students at the national universities, but some members of the public have questioned why some Singaporeans students should be turned away at all to allow foreign students in.

Ho acknowledges that there is a legitimate economic argument to putting a cap on the number of foreign students at the universities. "Our schools, our universities are heavily subsidised, so it's justifiable that taxpayers' money should go towards the children of taxpayers," he said.

Yet, he believes that there is a qualitative argument for retaining a significant number of foreign students at the schools. "A society that does not welcome diversity is going to be a very brittle society," he said.

Beyond the policies, Ho observed that the PM was trying hard to connect with young people.

"You can see from the examples he gave, the little things like the young guy who took photos of the flats, the Bowen cafe. I think he was trying to tell people that there are many ways for them to take initiative, to have a sense of ownership in Singapore," he said.

"Young people nowadays in this generation won't find fulfillment just by joining the civil service and feeling empowered by writing policies that will affect millions of people. They want to do things that affect people's lives directly, and PM has tapped into that sentiment" he said.

Freedom of speech

As a former student activist and journalist who had been detained under the Internal Security Act in 1977 for articles written for the Far Eastern Economic Review, Ho also acknowledges that the Internet has allowed much wider access to information than ever before.

"No one controls knowledge any more," he said. "But technology by itself is apolitical. It is simply an enabler of processes, so I think we have to see the Internet in that perspective." He cited how Blackberry phones were equally used by dissidents in the Middle East as well as by criminal gangs in London.

While social media led to the Arab spring revolution, the lack of control of knowledge also has its negative side, he pointed out.

"No government in the world, including China, can control knowledge, but does it mean it is going to lead to a flowering of democracy or that the Internet is only good for the world? That's not the case. Paedophilia has risen enormously now because paedophiles all over the world are now connected," he said.

Asked whether it would now be futile for governments to control the Internet or the flow of information therein, he said he agreed with what former Foreign Affairs Minister George Yeo once said: "That even if we know it is futile, it is important for a society to come together and decide what we accept and don't accept."

"I think it is important to have values in the society and these values should be expressed through positive encouragement as well as negative sanctions," he argued.

"For student groups you shouldn't cut down on them, but for paedophelia groups you should," he said.

In Europe, he noted, it is completely normal to have anti-semitism outlawed because they had gone through the Holocaust, but other than that, religious hatred is tolerated in society.

"We have to examine our own history, where we're coming from. Given our own history, the freedom of expression about religion clearly needs to be controlled," he said.

"If you don't have negative sanctions, you don't create the boundaries for society nor for young people when they grow up about what is acceptable or not acceptable," he said. "But these negative sanctions should not be simply dictated by a government; they should reflect the values of the whole society and be widely debated."