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FMM objects to the Foreign Worker Levy Increase

FMM Press Statement

The Government’s sudden decision to double levy rate for the manufacturing sector with
immediate effect is unacceptable. The Government has not given due consideration to the significant impact on business sustainability and socio-economic consequences.

The Federation of Malaysian Manufacturers (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 had recently informed that the levy burden would be shifted back to employers. Employers had asked that levy rate should at least be maintained at the current rate until economic conditions are better. The doubling of levy rate is therefore most disappointing. The Government has not taken into consideration employers' plea and cooperation.

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.

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.

FMM has always maintained that while businesses are aware of the need to reduce dependency on foreign workers, any 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.

FMM hopes that the Government would reconsider its decision on the foreign workers levy rate increase and to implement in phases when the economic situation improves.  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.

February 1, 2016

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