JOINT PRESS STATEMENT: Business Community Thanks MITI for 2-Year Deferment of 80:20 Local-to-Foreign Worker Ratio in the Foreign Worker Quota

Kuala Lumpur, July 18, 2022 – The business community comprising 51 industry organisations, trade associations and chambers supports the decision by the Government, particularly the Ministry of International Trade and Industry (MITI), to defer the implementation of the 80:20 ratio which has been used as the new foreign worker quota determinant for the manufacturing sector ever since the lift of the freeze on foreign worker recruitment from February 15, 2022.

With the country transitioning to the endemic phase of the Covid-19 pandemic with the reopening of international borders but amidst global economic headwinds, a conducive business ecosystem is most critical at this juncture to ensure the sustainability of business and overall economic growth which ultimately benefit the nation and rakyat. Thus, the business community is most thankful to MITI for taking heed of the numerous calls to urgently support business recovery by deferring by two years the condition that Malaysians must form at least 80% of the workforce in manufacturing companies before the companies are allowed to employ foreign workers.

The business community, either directly or indirectly, has been impacted by the 80:20 ruling as manufacturers with their suppliers, vendors, contractors and customers are all part of the supply chain that ultimately affects the consumers. The imposition of this ruling has impacted the ability of our industries to meet their sales orders and meet their obligations as part of the global supply chain. It has significantly affected the ability of industries to ramp up operation capacity as well as expand operations to meet increasing global demands. Labour shortages have led to companies experiencing delays in fulfilling delivery of goods, huge backlogs, loss of existing customers and loss of potential business.

The deferment of the ruling, which we recognise is a temporary measure for two years, will certainly provide a relief to the business community as apart from the acute labour shortages, businesses are also currently under tremendous pressure to contain increasingly challenging high operating cost given the rising inflationary pressures contributed amongst others by the global supply chain disruptions due to the pandemic, geopolitical tensions, soaring energy prices, rise in in freight rates as well as local cost factors as a result of the increase in minimum wages, energy costs and the weakening of the Ringgit.

The business community does not favour foreign workers over locals and filling job vacancies with locals has always been a top priority. Moreover, employing foreign workers is not cheap and easy with the ever changing labour policies as well as demands of international labour standards. The reality is that companies are unable to obtain sufficient supply of local workforce, especially general workers as our locals are not willing to take up such positions. Many developments have taken place in the country, especially within the realm of the education system that enables students to go for higher opportunities with their qualifications. As such, the labour shortage at the shop floor level remains unfulfilled. Industries, especially those that are inherently labour-intensive, have gone to great lengths to employ locals for the general worker positions by offering higher remuneration and benefits. There are even companies that are willing to pay search fees for the supply of local workers.

It must also be recognised that not all traditional labour positions can be replaced with automation and as such, there will continue to be a demand for labour to fulfil this manpower requirement. Hence, the demand for shop floor workers cannot be equated to the lack of efforts by industries to automate. Actually, the process to reduce dependence on foreign workers through automation is already taking place but it is a gradual process that must continue to be supported by the Government.

The business community will continue to do our part to ensure a healthy economic growth for the nation. At the same time, we look forward to similar support from other Government Ministries and agencies to emulate the wisdom and business-friendly initiatives of MITI so that together, we will weather this challenging period as Keluarga Malaysia.

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Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers
Signing of behalf of the 51 Supporting Industry Organisations, Trade Associations and Chambers of Commerce

1 Federation of Malaysian Manufacturers (FMM)
2 Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM)
3 Building Material Distributors Association Malaysia (BMDAM)
4 Bumiputera Manufacturers & Services Industry Association of Malaysia
5 Bumiputera Retailers Organisation (BRO)
6 Consortium of Indian Industries in Malaysia (CIIM)
7 Direct Selling Association of Malaysia
8 Federation of Goldsmiths and Jewellers Associations of Malaysia (FGJAM)
9 Federation of Malaysia Hardware Machinery Building Material Dealers’ Association (FMHMBA)
10 Federation of Malaysian Fashion Textile and Apparel (FMFTA)
11 Federation of Malaysian Freight Forwarders (FMFF)
12 Honda Malaysia Suppliers Club (HMSC)
13 Kulim Industrial Tenants Association - (KITA)
14 Machinery & Engineering Industries Federation (MEiF)
15 Malaysia Bakery Biscuit Confectionery Mee and Kuay Teow Merchants Association
16 Malaysia China Chamber of Commerce (MCCC)
17 Malaysia Medical Device Association (MMDA)
18 Malaysia Rail Industry Corporation (MARIC)
19 Malaysia Steel & Metal Distributors' Association (MSMDA)
20 Malaysia Trucking Federation (MTF)
21 Malaysian Automotive Association (MAA)
22 Malaysian Automotive Component Parts Manufacturers Association (MACPMA)
23 Malaysian Ceramic Industry Group (MCIG)
24 Malaysian Consortium of Mid-Tier Companies (MCMTC)
25 Malaysian Corrugated Carton Manufacturers’ Association (MACCMA)
26 Malaysian Fire Protection Association (MFPA)
27 Malaysian Footwear Manufacturers Association (MFMA)
28 Malaysian Furniture Council (MFC)
29 Malaysian Garments Marketers Association (MGMA)
30 Malaysian Indian Chamber of Commerce and Industry (MAICCI)
31 Malaysian International Chamber of Commerce & Industry (MICCI)
32 Malaysian Iron and Steel Industry Federation (MISIF)
33 Malaysian Organisation of Pharmaceutical Industries (MOPI)
34 Malaysian Petrochemicals Association (MPA)
35 Malaysian Plastics Manufacturers Association (MPMA)
36 Malaysian Pulp and Paper Mills Association (MPPMA)
37 Malaysian Retail Association (MRA)
38 Malaysian Rubber Glove Manufacturers Association (MARGMA)
39 Malaysian Rubber Products Manufacturers’ Association (MRPMA)
40 Malaysian Textile Manufacturers Association (MTMA)
41 Motorcycle & Scooter Assemblers And Distributors Association of Malaysia (MASAAM)
42 National Tech Association of Malaysia (PIKOM)
43 Pengilang Peranti Perubatan Malaysia (PERANTIM)
44 Persatuan Usahawan Maju Malaysia (PUMM)
45 Pharmaceutical Association of Malaysia (PhAMA)
46 SAMENTA - Small & Medium Enterprises Association (SAMENTA) Malaysia
47 SME Association of Malaysia (SME Malaysia)
48 Steel Wire Association of Malaysia (SWAM)
49 Technological Association Malaysia (TAM)
50 The Cement and Concrete Association of Malaysia (C&CA)
51 The Electrical and Electronic Association Malaysia (TEEAM)