Malaysia postpones foreign worker levy

Faced with a concerted backlash by contractors and other businesses, the government of Malaysia has put off plans to make companies pay a levy for foreign workers.

On 11 January the Cabinet said the new rule, announced without warning and to much consternation on New Year’s Eve, would be postponed until 2018 to give industries time to adjust.

Government decreed on 31 December that employers in the construction, manufacturing and services sectors would now have to pay the levy on foreign workers themselves, instead of deducting it from workers’ salaries, as they had done before.

Set to take effect the very next day, on 1 January 2017, the move followed a hike in the levy applied to foreign construction workers to $413 (RM1,850) per worker from $268 (RM1,200) earlier in 2016.

Reacting to the unexpected rule, the Master Builders Association Malaysia claimed it would land the country’s construction sector with an extra bill of around $447m (RM2 billion).

Employers have welcomed the postponement.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said companies agree that their dependence on foreign workers must be reduced, but that they need time to get used to the new rule.

"We can hardly absorb the new costs because of the challenging economic situation," he said, reports The Star Online. "The one-year time frame given can be utilised fully to re-look how we manage foreign workers and for the Government to revamp the recruitment system."

The Master Builders Association Malaysia (MBAM), another prominent critic of the rule, said in a statement that it still wants the levy scrapped but that the postponement could help address long-running issues in the labour industry, The Star reported.

Image: Construction workers with concrete vibrator at a construction site in Selangor, Malaysia (Aisyaqilumar/Dreamstime)

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