Malaysian Manufacturers Tell Putrajaya To Reconsider Levy Rate Increase

The Federation of Malaysian Manufacturers (FMM) today strongly objected the sudden decision to increase foreign workers levy rate in manufacturing sector, saying that Putrajaya has failed to consider the significant impact on business sustainability and socio-economic consequences.

Describing it as unacceptable, the federation urged the government to reconsider the decision and implement it in phases when the economic situation improved.

“FMM strongly objects to the sudden and steep increase in foreign workers levy rate from RM1,250 to RM2,500 per worker per year.”

“The government should call in industry stakeholders to discuss this decision and work together on a more acceptable schedule of increase as well as timing. In the meantime, the levy rate increase should be withdrawn,” it said in a statement today.

Yesterday, Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi said that the decision to restructure the levy rate system for foreign workers into two categories was expected to bring an extra income of RM2.5 billion to the country.

Manufacturing, construction and service sector would fall under the first category, where each worker would be charged the new rate of RM2,500 while plantation and agriculture which came under the second category would be charged RM 1,500 per worker, he said.

The new rate comes into effect beginning today. Domestic workers were exempted.

FMM said employers had asked that levy rate should at least be maintained at the current rate until the country’s economic conditions were better.

“The doubling of levy rate is very hefty considering that manufacturers already have to contend with the current challenging economic conditions and the rising cost of doing business, namely, the new minimum wage level, higher energy costs, higher costs of raw materials inputs and lower sales revenue arising from the weakening of the ringgit,” FMM said, adding that the government had not taken into consideration employers’ plea and cooperation.

“Business sustainability is at stake. Jobs are also at stake, even for local workers when businesses find great difficulty in sustaining their operations.

“The government should look at business sustainability in totality, considering all relevant factors which would have an impact; and not in isolation of issue by issue.

“All issues put together become an insurmountable economic fire which could overwhelm and consume businesses, employees and suppliers throughout out the supply chain,” the association said.

FMM said changes should be pre-announced and gradual whether with respect to the quantum as well as timing of the increase to allow companies adequate time to adjust.

“Changes and especially hefty changes with significant impact on business costs, should not be made overnight.” – February 1 2016.

Source: Malaysia Insider

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