Misif: Scrap new ruling on foreign worker levy

PETALING JAYA: The Malaysian Iron and Steel Industry Federation (Misif) has urged the government to rescind the implementation of the policy requiring employers to bear the cost of foreign worker levy.
In a statement yesterday, Misif president Datuk Soh Thian Lai also called on the government to conduct a stakeholders’ consultation process on the matter.
Last week, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi announced that employers would have to pay for the levy on their foreign workers under the Employer Mandatory Commitment (EMC) effective Jan 1, 2017.
The new ruling is aimed at ensuring that employers are fully responsible for the foreign workers under their employment.
“Misif is truly astounded with this sudden announcement and immediate implementation of the EMC by the government without any dialogue or due consultation with businesses, which will have immediate cost and operational impact on manufacturers, including iron and steel manufacturers,” Soh said.
“While we appreciate the government’s objective to reduce the number of cases of workers fleeing, working illegally in other sectors, overstaying and others, this monumental task require shared responsibility and collective effort of all stakeholders and certainly not the employers alone,” he added.
Soh said there are still unresolved issues related to foreign labour including the unwillingness of locals taking up jobs or inability to stay long in a job.
In addition, the alternative adoption of labour-saving processes through the introduction of mechanisation and automation systems is difficult and not feasible at this point of time due to uncertain market conditions and the weak ringgit.

“It has been reported that as much as RM5 billion could be drained from the Malaysian economy every year if employers are required to pay the levy for hiring foreign workers. It will contribute to an increase in the operating costs, pose an additional financial pressure on employers as well as the overall competitiveness of industry players. This will also negate recent efforts by Bank Negara Malaysia in stabilising the local currency,” said Soh.
He said the Malaysian iron and steel industry has gone through challenging times over the last couple of years including worries over the China Factor while the implementation of the Goods and Services Tax, ringgit depreciation, withdrawal of utilities subsidies and global economic downturn have resulted in the rise in cost of doing business.
Soh stressed that passing on incremental costs to consumers would create an inflationary pressure on the consumer or further reduce business volume.
“Companies have been preparing to face the challenges of the new year but it is unwelcome surprises like this EMC (and the natural gas price increase over the next three years announced by the government last week) which will erode competitiveness and present a real setback to the industry,” he said.