Malaysia : Employers to pay foreign worker levy starting Jan 1, 2018

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PUTRAJAYA (Dec 21): Starting Jan 1, employers nationwide are required to pay the levy for their foreign workers.

The Human Resources Ministry in a statement here yesterday said all employers must pay the levy for new foreign workers as well as for foreign workers who have renewed their Temporary Employment Visit Pass (PLKS).

“This policy also applies to employers who have already forwarded their levy payments before the policy comes into force, even if the PLKS period is still active from this year and expires in 2018.

“Strict action will be taken against employers who fail to comply with the law, regulations and policies set forth with regard to the levy payment of foreign workers,” it said.

The levy payment ruling is already stipulated in the Employers Undertaking document which must be signed by the employer before they are allowed to hire foreign workers.

The levy rates for foreign workers in Peninsular Malaysia for the manufacturing, construction and services sectors are fixed at RM1,850, while for the plantation and agriculture sector the rate is RM640, and for maids ranging from RM410 to RM590.

For Sabah and Sarawak, the levy for foreign workers in the manufacturing and construction sectors are RM1,010, services (RM1,490), plantation (RM590), agriculture (RM410), and domestic maids ranging from RM410 to RM590.

The government, via the 11th Malaysia Plan has outlined initiatives to improve the foreign workers management system in Malaysia, including limiting the employment of foreign workers at 15 per cent for the country’s total employment rate by 2020, and regulating the influx of low-skilled foreign workers through the improvement of the foreign workers levy system.

In order to achieve the initiative, the Cabinet on March 25, 2016, approved that the levy for foreign workers must be borne by employers effective Jan 1, this year (2017).

However, after receiving the views and feedback from employers' organisations and taking into account the cost of doing business, the government decided that employers nationwide pay the levy on foreign workers, starting January next year.