Calling for an urgent meeting with the government to discuss the new Employer Mandatory Commitment (EMC), these groups representing manufacturers, SMEs, builders and heavy industry, also say the move was not thought through thoroughly before implementation, The Edge Financial Daily reported today.
On Dec 31, Deputy Prime Minister Ahmad Zahid Hamidi announced the implementation of the EMC from Jan 1, and that employers would be disallowed from deducting the levy from the wages of their workers.
Zahid, who is also home minister, said this policy change would ensure that bosses were more responsible in taking care of their workers and avert cases of foreign workers running away, changing sectors of work illegally, and overstaying and becoming illegal immigrants.
Master Builders Association Malaysia president Foo Chek Lee said members in his association had not anticipated any such move by the government, and were not prepared for the EMC.
“It impacts the construction works that are still ongoing, and which have no budget allocation for the EMC,” he told The Edge Financial Daily.
Foo warned that having 900,000 foreign workers in the construction sector, his members would face an estimated 2% increase in operational cost across the industry.
“With that, construction companies may end up passing the cost to consumers,” he was quoted as saying.
Foo said the government should have first discussed with the varous industries who will be affected with policies that have many implications, instead of imposing additional cost to employers.
“It is difficult for businesses as we are not sure about government decisions. We have just adjusted to the GST implementation and there were the revised foreign worker levies beginning in March last year.
“We appeal to the government to reconsider the move. It is not yet a good time to implement,” Foo said, according to The Edge.
His counterpart at the Malaysian Iron and Steel Industry Federation echoed the same complaint on the lack of consultation.
“We hope that the government will conduct a stakeholders’ consultation process on this very significant matter,” Soh Thian Lai said in a statement, according to the business daily.
“While we appreciate the government’s objective to reduce the number of cases of workers fleeing, working illegally in other sectors, overstaying, etc, this monumental task requires shared responsibility and collective efforts of all stakeholders and certainly not employers alone,” he added, calling the move “hasty”.
Meanwhile, Federation of Malaysian Manufacturers (FMM) president Lim Wee Chai also spoke of the need for an immediate dialogue with the home ministry.
“FMM has always said when there are changes to any policy which would result in an immediate cost impact on employers, it must be done with consultation, pre-announced and gradually implemented with a grace period before it comes into force,” Lim, who is also chairman of Top Glove Corp Bhd, told The Edge Financial Daily.
“The levy payment will cost Malaysia RM5 billion every year and this amount will be transferred out from Malaysia. With the ringgit weakening, the additional cost will be an additional burden and pressure on doing business in Malaysia,” he was quoted as saying, referring to the RM5 billion that the country stands to lose with foreign workers being able to remit the money they save, back to their own countries.
Lim too, expected FMM members to pass on the cost to their customers.
SME Association of Malaysia national president Michael Kang Hua Keong, however, believes the EMC will result in the opposite effect of what it was intended for with employers facing the risk of losing legal foreign workers.
“As this will incur additional cost for businesses to employ legal foreign workers, more illegal ones will start to come in.
“Thus, the aim to manage foreign workers better through the move will not achieve its objective,” Kang said, according to The Edge, adding that industry players wanted the prime minister to look into the matter urgently and revert to the previous system.
Higher standards
On Sunday, Malaysian Employers Federation executive director Shamsuddin Bardan told FMT that he was concerned that aside from the EMC, the government intended to introduce other measures for the benefit of foreign workers.
“I am concerned that the government intended to increase security deposits for foreign workers and impose higher standards for housing for foreign workers.
“In the past, the government made these commitments to comply with the Trans-Pacific Partnership Agreement (TPPA). But now that United States president-elect Donald Trump wants to ditch the TPPA, there is no corresponding benefit to employers who will incur additional costs,” Shamsuddin said.
He added that at present, the ability of businesses to pass on costs to consumers was limited due to an increase in price of goods but if costs go up, businesses would have little choice but to increase prices of goods and services.