Press Digest - Employers not happy with levy on foreign workers

PETALING JAYA: The government’s move to make it mandatory for employers to pay for the levy on foreign workers effective today has riled employers.
Some of them opined that it would “kill off” small and medium enterprises particularly those in the manufacturing sector, China Press reported today.
They lamented that instead of helping businesses when they are facing an increasingly challenging time amid an economic slowdown, the government is putting more burden on employers with the levy.
At present, foreign workers have to pay RM2,600 annually as levy, which employers deduct from their salaries.
SME Association of Malaysia president Datuk Michael Kang told the daily that the move will hit SMEs hard, adding that with the increase in operating costs, they will not be able to compete with their counterparts abroad.
“I’m convinced that the government does not encourage the development of SMEs in the country. It’s time that we moved our production lines abroad; to more populated countries. We can’t sit and watch or hope lest we might have to close shop.”
Pointing out that the manufacturing sector plays a vital role in the growth of our economy, Kang foresaw that the latest government move, coupled with an anticipated further slide in the ringgit, would result in another round of increase in the prices of goods.
He said the government’s “New Year gift” for the people will deal the economy a blow.
“Foreign investors will shy away due to the increased operating costs while local manufacturers will try to shift the additional costs onto the consumers.”
Meanwhile, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said the move is not logical as this is a trying time for employers.
He said the measure will hasten ringgit’s outflow.
“Foreign workers will not spend the (levy) money saved in Malaysia but to remit home.
“It is estimated that foreign workers repatriated more than RM38 billion a year. Following the revision in their basic pay in June last year, the figure is expected to increase by RM5 billion.
“The latest move means a further outflow of RM3 billion a year,” he said.