AS expected, business groups, including the Federation of Malaysian Manufacturers (FMM), have objected strongly to the government’s move to increase the levy on foreign workers (See table).
FMM argued that the decision to double the levy rate for the manufacturing sector with immediate effect was “unacceptable”, saying that it has not given due consideration to the impact on businesses and socio-economic consequences.
It said the move came as manufacturers are already contending with economic challenges and
the rising cost of doing business, including the new minimum
wage level.
Deputy Prime Minister and Home Minister Datuk Seri Dr Ahmad Zahid Hamidi has come out to explain the rationale for such hikes.
When announcing the hikes in Sibu on Jan 31, Zahid said the new rates would add RM2.5 billion to government coffers.
He also explained that the new rates were needed since foreign workers are also enjoying various benefits meant for Malaysians, such as subsidised prices for food and other necessities.
Deputy Home Minister Datuk Nur Jazlan Mohamed told this writer
that the new rates are much lower than in Singapore and the Gulf states. He also said companies should invest in technology to reduce dependence on low-skilled foreign workers.
Zahid will meet business leaders after the Chinese New Year to hear out their grievances. They claimed that they were not even consulted before the announcement was made.
The industry people could argue that the timing is not right with the current environment of rising business cost.
However, when we compare the pump prices of petrol and diesel with a bottle of mineral water (one litre), it shows the oil prices are at a huge discount.
We do not see the price of the bottle of mineral water coming down, meaning to say that businesses are not transferring “down” the cost. That means they could be enjoying a bigger margin.
Economists say if we go by that analogy, the industries can absorb the higher levy but, probably, the quantum is what we should be looking at.
Also, if we want to move to higher value-add investments, we should start phasing out low-skilled foreign workers.
The government has been working on this for some time but the businesses are not giving in because of the profit margin and the need to reinvent their business model.
Some argue about the timing. There can never be a prefect time. With lower energy prices, this could be the perfect time to re-look the levy cost and spur businesses to reinvent their strategy.
A veteran newsman, Jalil believes that a good journalist should be curious and sceptical at the same time