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FMM: 30% hike in foreign worker levy too steep

FMM In the News: The Edge, December 22, 2015

KUALA LUMPUR (Dec 21): The Federation of Malaysian Manufacturers (FMM) which represents over 2,600 manufacturers in the country, today said a 30% increase in foreign worker levy for certain industries early next year is too steep for them.

They also called for adequate consultation and more details on the proposed increase in levies.

They also want a grace period before the changes take effect to assist industries to make the necessary adjustments. 

"FMM has always emphasised to the government that any increases that would impact on the cost of doing business, like levy for foreign workers, should be gradual, planned and pre-announced," it said in a statement today.

While it recognises that the levy rate is an effective market mechanism to change business behaviour in reducing the dependence on foreign workers and labour-intensity of industry, FMM said the increase in levy should not be so steep and immediate that it would adversely impact the competitiveness and viability of the manufacturing sector.

It suggests that the government implements a market-based levy mechanism to remove uncertainty and inconsistencies in government policies and procedures with respect to the recruitment of foreign workers.

"In this respect, we urge the government to concurrently simplify the current process and reduce the cost of recruitment of foreign workers.

"The existing system of control by quotas should be removed. Employers should be allowed to recruit foreign workers based on their need as long as they are prepared to pay the levy," FMM added. 

FMM is also of the view that levy rates should be eventually standardised across all economic sectors to prevent abuse, especially among those with diversified business interests who could bring in workers through the sector with lower levies only to re-deploy them in the sectors with higher levies.

"The manufacturing sector should not be made to bear a disproportionately higher burden," it said.

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