Tag - foreign worker levy

KUALA LUMPUR: Fifty-five industry organisations united in an unprecedented move to call on the government to withdraw the sudden increase in foreign workers’ levy that took effect on Monday, decrying the move as detrimental to costs of doing business, which will lead to price increases for consumers.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed declined to comment on the issue when met at a separate event.

The 55 trade organisations included all notable trade and industry organisations in the country, including the biggest, the Malay Chamber of Commerce Malaysia, the Associated Chinese Chambers of Commerce and Industry of Malaysia, the Malaysian Associated Indian Chamber of Commerce and Industry, the Malaysian Employers Federation, the SME Association of Malaysia and more.

Industry players opined that all sectors will feel the pinch, and estimates showed that the property sector would see a 2%-3% increase in the cost of building a house, a 1%- 8% impact on the profits of listed plantation companies, as well as a 2%-3% rise in costs for the manufacturing sector.

From left: ACCCIM president Datuk Ter Leong Yap, secretary-general Datuk Low Kian Chuan and Teo at the media conference today. SUNPIX by ZULKIFLI ERSAL

Instead, representatives from the organisations called for a comprehensive move to legalise the existing four million illegal foreign workers in Malaysia, which would result in a levy collection of RM5 billion for the government.

“We would suggest that RM2.5 billion of the RM5 billion raised be assigned to the government and the balance be reserved for the industries,” said ACCCIM deputy secretary-general Tan Sri Teo Chiang Kok.

He added that the application process to recruit foreign workers has to be streamlined, as the outsourced processes in the recruitment of foreign workers impose unnecessary costs. This calls for a holistic review of the entire application process, outsourcing programs and to address the illegal foreign workers.

Teo said the levy increase ranging from 100% to 300% was implemented without any prior notice or consultation with stakeholders.

“At the end of the day, the costs will be passed to consumers,” he said at a joint media conference here today.

Teo explained that the altruistic purpose of the levy is to level out the supposedly lower wages of foreign workers compared to local workers to eliminate the supposed advantage of recruiting foreign workers instead of local workers. He said the RM2.5 billion that would be added to the government’s coffers via the levy hike should not be taken as a source of revenue for the country.

“The levy is imposed to level the playing field so that there is no financial advantage in engaging foreign workers. It’s not a revenue source for the government. It’s a source to balance the attractiveness of employing local versus foreign workers.

“This is the worst time to increase any levies or fees because we’re strained by the economic slowdown. A lot of companies and enterprises are in a challenging position, some are (struggling) for survival. Any added burden may push them to the limit,” said Teo.

This is further compounded by the imposition of the Goods and Services Tax, falling value of the ringgit and the soon-to-be implemented new minimum wages. In fact with the implementation of minimum wage, industry players opined that there is now no differentiation in foreign workers and local wages.

The Malayan Agricultural Producers Association director Mohamad Audong told reporters that the additional cost per year for agriculture and plantation is RM569 million, while for plantation alone the additional cost is RM338 million.

Source: TheSunDaily

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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