55 industry groups in united stand against foreign worker levy hike

KUALA LUMPUR: Fifty-five industry organisations united in an unprecedented move to call on the government to withdraw the sudden increase in foreign workers' levy that took effect on Monday, decrying the move as detrimental to costs of doing business, which will lead to price increases for consumers.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed declined to comment on the issue when met at a separate event.
The 55 trade organisations included all notable trade and industry organisations in the country, including the biggest, the Malay Chamber of Commerce Malaysia, the Associated Chinese Chambers of Commerce and Industry of Malaysia, the Malaysian Associated Indian Chamber of Commerce and Industry, the Malaysian Employers Federation, the SME Association of Malaysia and more.

Industry players opined that all sectors will feel the pinch, and estimates showed that the property sector would see a 2%-3% increase in the cost of building a house, a 1%- 8% impact on the profits of listed plantation companies, as well as a 2%-3% rise in costs for the manufacturing sector.
Instead, representatives from the organisations called for a comprehensive move to legalise the existing four million illegal foreign workers in Malaysia, which would result in a levy collection of RM5 billion for the government.
"We would suggest that RM2.5 billion of the RM5 billion raised be assigned to the government and the balance be reserved for the industries," said ACCCIM deputy secretary-general Tan Sri Teo Chiang Kok).
He added that the application process to recruit foreign workers has to be streamlined, as the outsourced processes in the recruitment of foreign workers impose unnecessary costs. This calls for a holistic review of the entire application process, outsourcing programs and to address the illegal foreign workers.
Teo said the levy increase ranging from 100% to 300% was implemented without any prior notice or consultation with stakeholders.
"At the end of the day, the costs will be passed on to consumers," he said at a joint media conference here yesterday.

Teo explained that the altruistic purpose of the levy is to level out the supposedly lower wages of foreign workers compared to local workers to eliminate the supposed advantage of recruiting foreign workers instead of local workers. He said the RM2.5 billion that would be added to the government's coffers via the levy hike should not be taken as a source of revenue for the country.
"The levy is imposed to level the playing field so that there is no financial advantage in engaging foreign workers. It's not a revenue source for the government. It's a source to balance the attractiveness of employing local versus foreign workers.
"This is the worst time to increase any levies or fees because we're strained by the economic slowdown. A lot of companies and enterprises are in a challenging position, some are (struggling) for survival. Any added burden may push them to the limit," said Teo.
This is compounded by the imposition of the Goods and Services Tax, falling value of the ringgit and the soon-to-be implemented new minimum wages. In fact with the implementation of minimum wage, industry players opined that there is now no differentiation in foreign workers and local wages.

The Malayan Agricultural Producers Association director Mohamad Audong told reporters that the additional cost per year for agriculture and plantation is RM569 million, while for plantation alone the additional cost is RM338 million.