This article first appeared in The Edge Financial Daily on September 28, 2018

KUALA LUMPUR: Just as the government announced that there will be no change after all in the terms of the levy for skilled foreign workers, the Federation of Malaysian Manufacturers (FMM) is insisting that the RM10,000 per worker annual payment will be too difficult for employers to bear.

The FMM, instead, wants the RM10,000 levy, which must be paid to extend the services of foreign workers who have already worked in Malaysia for 10 years, to be valid for three years and not one year.

“It’s very difficult for employers to bear this cost,” said FMM president Datuk Soh Thian Lai yesterday, warning that businesses may resort to recruiting new foreign workers instead of extending the services of the skilled workers.

“If it were RM10,000 for three years, there would be high chances that employers would bear the cost because they could retain their skilled foreign workers [longer] while having good output. Thus the return [on investment] is there,” he told reporters on the sidelines of the FMM Industry 4.0 Conference.

“But if it’s maintained at RM10,000 a year, then employers may not be able to retain the skilled foreign labour and be forced to seek new recruits. This would cause disruption to the system,” he said.

Soh said FMM agreed that it would not be wise to get the workers to pay the RM10,000 levy as this would burden them considering that their usual salary was RM2,000 to RM4,000 per month and the levy cost translated into about RM666 per month.

On Monday, Finance Minister Lim Guan Eng announced that foreign workers who have worked in the country for more than 10 years would have to pay 80% of the levy with employers bearing the remaining 20%. However, on Tuesday the government withdrew that announcement following complaints that workers would not be able to afford the 80% portion, reverting to the initial plan for the payment to be fully borne by employers.

Thus, employers wanting their skilled foreign workers to extend their stay beyond 10 years must pay the RM10,000 levy per annum. Otherwise, they will have to send their foreign workers back home and re-employ them as new workers, for which they only pay a levy of RM1,850 per year.

Soh called on the government to hold direct talks with industry groups on the matter. “We urge the government to sit down with the trade associations and everyone involved in the industry to come up with an amicable solution for the sake of the industry and country,” he said.

International Trade and Industry Minister Darell Leiking, who was also present at the conference, told reporters who approached him with the FMM proposal that he would “bring the matter up to [the] cabinet soon”.

“I understand the concerns of employers and will discuss this with my colleagues,” Leiking said.

Meanwhile, the Malaysian Trades Union Congress (MTUC) said employers should have long-term strategic planning, especially in developing local workers so that they are not continuously dependent on foreign workers.

“The continuous dependency on migrant workers without any intention to upskill the local workers will be construed as the employers making Malaysia a breeding ground for cheap labour contrary to the aspirations of Malaysians to make Malaysia a high–income nation.

“The government alone cannot achieve this vision when we allow employers to only focus on corporate greed,” MTUC secretary-general J Solomon said in a statement.

Pointing out that the government allowed the extension of retaining foreign workers for the benefit of the employers, he said this would not be needed if employers “had the foresight to train and retrain Malaysian workers in the best interests of the nation”.

Therefore, he said any concession on the levy sought by the employers should not be entertained “as it cannot be justified and can only be construed as an attempt to loot from the government’s coffer.”