MEF president Syed Hussain Syed Husman attributed the arrears to cash flow problems suffered by businesses across the board during the Covid-19 pandemic.
“While the larger companies can pay (the levies), I think HRD Corp has been sensitive to the needs of SMEs. We must be aware about the realities facing SMEs and what payments they will make first when times are difficult.
“When you only have enough to pay salaries, there are other payments which you will defer until later. Some have delayed levy payments while others have asked to pay the levy in instalments. All this will affect collection,” he told FMT.
Auditor-General Wan Soraya Wan Radzi had in her 2024 report, released last week, noted that HRD Corp had RM205.42 million in uncollected levies due from 21,058 employers.
The report also raised several other financial and governance issues, including the alleged misuse of training grants worth RM51.69 million for the corporation’s Gerak Insan Gemilang scheme, which human resource minister Steven Sim swiftly denied.
On Wednesday, Sim’s ministry said it would conduct an independent audit of HRD Corp following findings made by both the A-G and Public Accounts Committee.
Syed Hussain said he was glad Sim is taking it upon himself to look into the matters raised.
“We need to give him time and trust to address all these issues,” said Syed Hussain.
The A-G’ report said unpaid levies had steadily risen in recent years, going from RM72.47 million in 2020, to RM96 million (2021), RM141.77 million (2022) and RM183.87 million (2023).
The levies are a mandatory contribution that employers must pay towards training, developing and upgrading the skills of Malaysian citizens in their employ.
HRD Corp previously said many employers were unaware of the need to pay the levies, while some had financial issues or were in the process of rebuilding their businesses following the Covid-19 lockdowns.
Despite this, the corporation collected a record-breaking RM2.2 billion in levies last year, compared to RM1.82 billion in 2022. It also approved financial assistance worth RM1.78 billion in 2023.
The A-G’s report noted a 349.4% upswing in levies collected by HRD Corp over the last three years, following its expansion to cover all economic sectors in the country.