Ex-FMM chief calls for foreign worker levy increase under 12th Malaysia Plan

Tan Sri Yong Poh Kon

Tan Sri Yong Poh Kon

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KUALA LUMPUR (Dec 10): Former Federation of Malaysian Manufacturers (FMM) president Tan Sri Yong Poh Kon has proposed that the foreign worker levy be raised from the current RM150 per month, on a staggered basis and varied based on the number of foreign workers employed by an employer, under the upcoming 12th Malaysia Plan (12MP).

He said this during a webinar today, which saw panellists put forward their suggestions for the next five-year plan for Malaysia, which he opined is a way to address the country's overdependence on foreign labour, which has depressed wage levels.

Yong, who is also chairman of Royal Selangor, proposed a new way of imposing foreign worker levy on companies, similar to how Singapore handles the issue, which is based on a bracket system.

He explained that in Singapore, the foreign worker levy is S$370 per month for basic skilled labour, for companies with foreign labour accounting for up to 25% of their workforce, which gradually increases to S$470 for those with 25% to 50% foreign labour and S$650 for those with foreign workers making up more than 50%.

"We need to move to something like this. If you have more foreign workers in your company, you pay a higher rate," he said during his presentation.

Overall, he divided the rates into four proposed tiers, namely:
• Tier 1 (0%-15% of workforce) should pay RM250 per month per foreign worker
• Tier 2 (15%-40% of workforce) should pay RM300 per month per foreign worker
• Tier 3 (40%-70% of workforce) should pay RM360 per month per foreign worker
• Tier 4 (more than 70% of workforce) should pay RM430 per month per foreign worker

These rates would also gradually increase year by year, in order to steer employers away from relying on migrant workers.

"If foreign workers make up more than 70% of your workforce, you may as well locate your factory in the origin country of the foreign workers.

"Until we take this sort of drastic measure, we will not be able to address this foreign worker issue," he said.

However, in order for this proposal to work, he suggested that 75% of the levy paid by the employers must be reclaimable by the employers, for investment in initiatives like automation — to increase productivity — or the building of community childcare centres at the workplace, to assist parents and encourage women to come back to work, which would increase the percentage of women in the workforce.

Yong said that this could be administered similar to how the Human Resource Development Fund does it — reimbursing employers of the levy they have paid for training purposes.

"Higher levies like this on a reclaimable basis and open recruitment by employers would influence the behaviour of employers and result in the rise of automation and in local wages, as we will have to match local workers' wages with that of the foreign workers," he said.

Yong proposed his idea at the webinar entitled "12MP: A conversation with Datuk Seri Mustapa Mohamed", organised by the Malaysian Economic Association. However, the Minister in the Prime Minister's Department (Economy) was not present during the session, due to other obligations.

S Kanagaraju