Govt urged to review levy on foreign workers


The Federation of Malaysian Manufacturers (FMM) has requested the government to review the annual RM10,000 levy imposed on foreign workers with 10 years of service to reduce their expenses and allow more time for succession planning.

FMM president Datuk Soh Thian Lai said the fee is deemed as very costly for the industry players to pay on a yearly basis and proposed that the amount to cover for a three- year employment.

“It is quite challenging for the employers to pay RM10,000 a year. We view that the sum should cover for three years and that will allow the manufacturers to groom and train a new batch of skilled workforces,” he said at the FMM Industry 4.0 Conference 2018 in Petaling Jaya yesterday.

Last Tuesday, Finance Minister Lim Guan Eng announced that the government had decided to return to the previous policy which requires only employers to pay the full cost of the levy.

Prior to the announcement, Lim said the levy will be split in 20:80 ratio between employers and foreign labours respectively.

Employers were complaining that the foreign workers could not afford to pay their 80% portion of the levy, which translated into RM8,000 per year or RM667 a month.

Soh said there are about 100,000 foreign workers who have worked for more than 10 years in the country and that the RM667 would account for between 15% and 30% of their average salary ranging from RM2,000 to RM4,000.

“Will they (skilled foreign workers) stay? We are not sure of that but we think it is not practical,” he added.

Soh hoped that the RM10,000 levy can be extended to a three-year period to enable employers to retain the talents and produce more output, while having more time to upskill other workers.

Otherwise, he said employers would be forced to get new recruits and that will disrupt the operations and competitiveness of the sector.

Soh also urged the government to discuss with trade associations and come up with a win-win solution.

In the meantime, International Trade and Industry Minister Darell Leiking, who was present at the conference, said he will bring the FMM’s proposal to the Cabinet.

Putrajaya has maintained the levy for foreign workers who serve less than 10 years at RM1,850 per annum and the policy will take effect on Oct 1.

Meanwhile, FMM launched its Industry 4.0 Roadmap yesterday to educate, collaborate and enable the federation members to initiate their journey for the Fourth Industrial Revolution (IR4.0).

Soh said FMM’s recent survey revealed that more than 70% of its members are not ready for IR4.0.

“They are still at IR2.0 or IR3.0,” he said, adding that Malaysia is still lagging behind Singapore and Thailand in the adoption of IR4.0.

However, he said Malaysian companies would be able to catch up as they have the advantage in terms of infrastructure and human capital, as well as the effective cooperation from both public and private sectors.