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Manufacturers Call for Adequate Consultation and a Gradual Increase in Foreign Worker Levy

FMM Press Statement

An increase in foreign worker levy for certain industries by at least 30% early next year would be too steep for manufacturers. In fact, given the current challenging times any increase would be a burden for manufacturers. Adequate consultation and more details on the proposed increase in levies are necessary and a grace period be allowed before the changes take effect to assist industries to make the necessary adjustments.  

The Federation of Malaysian Manufacturers (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. 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 is recognised 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. At the same time, a market based levy mechanism would 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.  

Additional levies collected because of higher levies should be ploughed back to provide financial assistance to industry to promote automation, skills training and the provision of childcare facilities such as crèches (company or community based) to raise female participation in the workforce. 

FMM is also strongly 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. 

FMM reinforces that adequate consultation with all stakeholders on new policies and procedures is very important to ensure that changes to policies are reasonable, practical and affordable to the business sector, particularly during challenging economic conditions. There should always be a grace period before measures are implemented. 

Details of the proposed increase in levy and the affected industries should be made known quickly, in particular to associations so that feedback could be provided to the Government. 

December 21, 2015

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