Tuesday, 10 January 2017

(The Star) Levy may incur construction players extra RM2bil in cost

New policy is added burden to sector, says MBAM
KUALA LUMPUR: The new foreign worker levy could see local construction players being hit with an additional annual cost of around RM2bil.
With an estimated 900,000 foreign workers in the local construction sector, the Master Builders Association Malaysia (MBAM) believes that the new policy will be an added burden to the local industry, which is already facing a host of challenges.
“The new policy will impair the cash flow of the employers and make our construction industry more expensive and less competitive,” said MBAM president Foo Chek Lee at a briefing yesterday.
“With the increase in minimum wages, fuel prices, cost of steel bars and depreciation of the ringgit, the imposition of the levy will create a cashflow problem.”
Foo said ultimately, local construction players will have no choice but to pass on the cost to its consumers.
Effective this year, employers are to be fully accountable for their foreign workers’ levy and can no longer deduct their salaries to pay the levy.
The enforcement comes under the Employer Mandatory Commitment (EMC), which aims to ensure that employers take full responsibility for their foreign workers, from the application stage right up till they return to their country of origin.
Foo said the MBAM is urging the Government to rescind the decision to make employers fully accountable for their foreign workers’ levy, as well as the implementation of the EMC.
“We would like to express our concern over the Government making this drastic unilateral decision without any engagement with our industry players.
“The construction industry is a key driver of our economy and this will also affect about 140 other downstream industries,” he pointed out.
Employers in the manufacturing, construction and services sectors (category one) will now have to pay a levy of RM1,850 for each foreign worker hired.
Plantations and agriculture sector bosses (category two) are to pay RM640 per worker.
Last week, CIMB Research said in a report it was expecting a net negative impact of between 1% and 3% for glove companies, due to the high dependency on foreign labour within the glove industry.
It said the Malaysian glove industry employed up to 42,000 foreign workers and that the levy would lead to a higher cost of RM77.7mil.

The Malaysian Iron and Steel Industry Federation said in a statement last week that the new policy would contribute to an increase in the operating costs, pose additional financial pressure on employers as well as the overall competitiveness of industry players.