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FMM Press Statement: FMM Welcomes Idea of Deduction of Foreign Workers’ Salary as Savings

Kuala Lumpur, December 18, 2018 The Federation of Malaysian Manufacturers (FMM) views positively the idea mooted by the Human Resources Minister YB M. Kula Segaran for foreign workers to have a form of savings and to concurrently address foreign workers runaway issues faced by employers. However, the industry calls for greater details to further understand the proposal and its mechanism.

While there could be some positive outcomes such as savings for workers, protection against runaway workers,reduction in short-term foreign exchange repatriation, etc, the following needs to be considered:

  1. Foreign workers may consider the proposed 20% deduction as too high as many would have financial commitments in their home country, including repayment of debt,
  2. The Employment Act should be amended to allow employers to make the deductions as statutory contributions by the foreign workers,
  3. The SOCSO Act may also need to be reviewed to undertake the role of managing the Fund. The proposed savings appear to be more in line with the EPF model than SOCSO,
  4. The mechanism and criteria for foreign workers to withdraw their funds as well as whether there is interest earned like savings in a bank,
  5. Need to look into the legality and human rights aspect to enforce savings and confiscate the earnings of a runaway worker.

FMM looks forward to be involved in the technical committee meetings which should be convened to further discuss this proposal before submitting to the Cabinet for consideration.

Dato' Soh Thian Lai
Federation Of Malaysian Manufacturers

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