The 15% target cap is in line with govt’s objective of creating citizens with skills and higher incomes, says MoHR

by SHAZNI ONG/ pic by TMR FILE

MYEG Services Bhd’s business outlook risked falling sharply last week after the government announced plans to cap the number of foreign workers in the country’s workforce at 15% by next year.

BIMB Securities Sdn Bhd analyst Afifah Abdul Malek said the company has yet to comment on the matter for the time being, but investors decided not to wait.

“The news on foreign workers cap by 2020 might have triggered the selling and anticipation on MyEG’s business outlook for next year,” she told The Malaysian Reserve last Friday.

The e-services provider’s shares closed 0.8% or one sen higher to RM1.26 last Friday after hitting an intraday low of RM1.16. However, the counter fell sharply by 15 sen or 10.71% to RM1.25 a day earlier.

MyEG is valued at RM4.54 billion at close last Friday. Its shares have been volatile year-to-date, trading between the 94 sen and RM1.70 range over the period.

In a written response posted on the Parliament website, the Ministry of Human Resources (MoHR) noted that the 15% target cap is in line with the government’s objective of creating citizens with skills and higher incomes.

“The current policy of the government is to prioritise employment opportunities for locals. The government has only given permission to hire foreign workers in certain sectors and subsectors that have been identified as having little interest among the locals, such as construction, manufacturing, agriculture, plantation, services, and mining and quarrying sectors,” the ministry said.

The move is set to affect MyEG’s bottom line because around 40%- 50% of its revenue come from the foreign workers-related programmes, Afifah stated.

She noted that there are not many details from the government on the matter yet, and how it will impact MyEG’s prospects.

The e-services company’s shares also fell on market talk that Malaysian Road Transport Department will stop issuing road tax posts and will be replaced by radio frequency identification.

The impact on MyEG’s business from this move could be limited as drivers/owners will still need to change taxes and buy auto insurance.

The bigger risk to MyEG’s business prospects comes from the possible end of its foreign labour registration- related business, possibly by August next year. The company will have to be notified earlier.

“If the government wants to find another party to handle the foreign workers programme, they (the government) need to find one (that is) really good in terms of its implementation. What MyEG is doing is quite good, and there is no issue so far in terms of how MyEG manages its projects,” Afifah said.