FMM: Automation will lower foreign labour dependency

For manufacturers to be relevant, technology must be upgraded in tandem with new policies by the govt


The manufacturing sector should continue to decrease its dependency on foreign labour, while opting to invest in automation.

The Federation of Manufacturers Malaysia (FMM) president Datuk Soh Thian Lai said investment from start-ups for automation might be costly, but manufacturers must think of the future, as well as how to compete globally.

“It is not just about domestic markets, but manufacturers must look at the global markets as targets in order to be able to compete in the Asean region, as well as with China and the rest of the world,” he said after presenting the findings from the FMM-MIER (Malaysian Institute of Economic Research) joint business conditions survey for the first half of 2018 in Kuala Lumpur yesterday.

Soh said for manufacturers to stay relevant, technology must be upgraded in tandem with new policies by the government on various strategies to spur economy growth.

He added that FMM had proposed to the government that the foreign workers levy paid by employers be parked in one fund called Industrial 4.0 and Automation fund.

“This will allow employers to claim back from the fund for investment into automation.

“Levy is punitive, so the more hiring of foreign labour is done the more the employer pays. But, we must start reducing the dependency on foreign labour,” Soh said.

He also urged the government to work together with the private sector, so that the fund could benefit the industry as a whole.

FMM council member Tan Sri Saw Choo Boon said it is important to look at the economy and monitor the progress of the country when it could produce at a lower cost.

“We are no longer competitive, there are many other countries out there that can produce at a very low cost. Now, to be sustainable and move the economy, we need a higher value economy producing higher value products.

“To do so, we need higher skilled workers and automation. Yes, we will still need foreign labour, but we must slowly ease out,” Saw said.

Soh added that with the ”Love Malaysia, Buy Made in Malaysia” campaign, domestic consumption of locally made products could be boosted, while increasing exports by the small and medium-sized enterprises (SMEs).

He said SMEs should also be able to work with e-commerce organisations to increase the network and link partners.

“We also plan to work with the governmental agencies like the Malaysia External Trade Development Corp to promote local products.

“The government will need to spend more aggressively to promote products throughout the global network,” he said to The Malaysian Reserve.

The FMM-MIER survey also revealed that a majority of manufacturers laud the proposal for a higher minimum wage.

However, manufacturers also expect the government to share the cost with the employers.

“The government (plans) to raise the minimum wage to RM1,500 in the first five-year term; from our survey — 62% of the 434 respondents have said it is achievable within the time frame. However, the wages must link to productivity and it must be shown,” Soh said.

He said the government should honour their manifesto and if so, 84% of respondents said the minimum wage should be gradually raised beginning 2019, with 44% open for a hike to RM1,200 in the first year.

Soh added that the previous government defined the minimum wage on basic wage and in doing so, distorted the wage system in Malaysia.

“Many employers had shifted the performance factors into the basic wage, so there were no performance-driven factors included. Hopefully, the current government will be able to redefine it and include it to be total wages,” he added.