Several business chambers are concerned about the message being sent by the new requirement for dependant's pass holders to obtain a formal work pass in order to work in Singapore.
They said many such foreigners have skills and experience that can contribute to the economy here, and the more restrictive rule may make it more difficult for companies to relocate staff or senior executives with families.
But other observers said the impact on companies will not be large, as dependants with valuable skills can qualify for work passes.
The change, which kicks in on May 1, was announced by Manpower Minister Josephine Teo during the debate on her ministry's budget last week.
Employers of dependant's pass holders will need to apply for an Employment Pass (EP), S Pass or work permit for them, and the relevant qualifying salary, dependency ratio ceiling and levy will apply.
Only dependant's pass holders who are business owners and employ at least one Singaporean or permanent resident will be able to work using a letter of consent.
There are an estimated 11,000 dependant's pass holders here working on letters of consent, or about 1 per cent of work pass holders, excluding foreign domestic workers. Even though the numbers affected are small, Dr David Leong, managing director of human resources firm PeopleWorldwide Consulting, said the move tilts the balance of probabilities towards Singaporean job seekers.
Business chamber leaders said some examples of jobs that dependant's pass holders take on include part-time teachers in private education, entrepreneurs, roles in foreign chambers and religious institutions, and language teachers in local organisations.
Ms Kate Baldock, executive director of the Australian Chamber of Commerce here, said that among the Australian community, there is a concentration of workers on letters of consent in certain specialised industries as well as operating sole person enterprises, and these sectors could be significantly impacted by the changes.
"We are hearing from certain sectors as well as our SME (small and medium-sized enterprise) and start-up community that this could cause significant challenges," she said.
Dr Lei Hsien-Hsien, chief executive of the American Chamber of Commerce in Singapore, noted that many dependant's pass holders have advanced degrees, skills, experience and capabilities that can potentially fulfil niche workforce needs.
Estimated number of dependant's pass holders here working on letters of consent. They represent about 1 per cent of work pass holders.
Many own small start-ups, likewise contributing to the growth of Singapore's economy, while some provide niche services such as marketing and communications for non-governmental organisations.
"However, due to circumstances, they often require a more flexible working arrangement including part-time or contract work, which the letter of consent accommodated," she said.
"It is much more attractive and reassuring for families to know that there is a relatively straightforward option to obtain a letter of consent to facilitate work for dependants."
The eligibility criteria for a letter of consent is simpler than for a work pass. Under the current rules, dependants of EP, EntrePass or Personalised EP holders are eligible for a letter of consent if their dependant's pass is valid for at least three months and they have a job offer with a Singapore employer. Workers on letters of consent are not subject to quotas, levies or qualifying salaries.
Singapore International Chamber of Commerce CEO Victor Mills said the new rule narrows choices and opportunities, particularly for partners and spouses of EP holders. "The more serious impact will be one of perception that Singapore is a less welcome place than in the past. And we all know that perception is reality for many people."
Mr Federico Donato, president of the European Chamber of Commerce in Singapore, agreed: "The message that such restrictions will send across would be quite negative as such measures will deprive many people, often young spouses following their partners abroad, from contributing to society."
Other observers do not expect a big impact on companies.
Singapore Business Federation CEO Lam Yi Young said the majority of foreign employees in companies here would already be on work passes.
Senior economist Irvin Seah, who is head of strategic projects at DBS Bank, said the change shows an attempt to ensure a more consistent policy towards formal employment in Singapore.
OCBC Bank chief economist Selena Ling, citing the recently launched Tech.Pass scheme as an example, said: "Singapore clearly remains open to foreign talent, especially at the mid-to higher-level professionals in key sectors."