STA disappointed with sudden hike in foreign workers’ levies

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Sarawak Timber Association (STA)

Sarawak Timber Association (STA)

KUCHING: Sarawak Timber Association (STA) has expressed disappointment with the government’s decision on
the sudden increase in levies of foreign workers, describing the change as unbelievable and unreasonable.

In a press statement, STA said they were aware of the government’s goal of elevating labour market efficiency to accelerate economic growth and effort to reduce the nation’s dependency on foreign workers progressively.

STA is very disappointed with the sudden change of implementation of the government’s policy without taking into consideration any direct and indirect effect of doing business.

STA said this in reacting to the government’s announcement on Jan 31 on the increase of levies for foreign workers in manufacturing and construction sectors from RM1,250 to RM2,500 and in plantation sector from RM590 to RM1,500 and in agriculture sector from RM410 to RM1,500.

“The increase in levies by 100 per cent, 154 per cent and 266 per cent for the respective sectors is too sudden and hasty,” the statement said.

STA viewed this knee-jerk increase in levies as unbelievable and unreasonable, particularly the levies for plantation and agriculture sectors.

“For the manufacturing sector, the proposal given by the government through the Ministry of International Trade and Industry Malaysia (MITI) in 2014, was to progressively increase the levies from RM1,250 to RM1,750 in 2015 and an additional increase of 40 per cent in 2017 from RM1,750 to RM2,450, RM3,430 in 2019 and RM5,000 in 2020.”

“STA is given to understand that the reason for implementing the measures in a phased and gradual manner is not to disrupt the growth momentum,” it added.

In all the consultative meetings which STA had attended since 2011, the statement said all stakeholders had objected strongly with justifications to the policy of reducing the nation’s dependency on foreign workers using higher levies as a tool and hence the proposed levies increment.

“Stakeholders also urged the government to conduct detailed studies to ensure this policy will not affect the growth momentum of the country.

“STA feels strongly on the failure of government to take into consideration stakeholders’ grave concerns as highlighted in various consultations held in the past and had proceeded to increase the levies even more than the proposed rates to be implemented in 2017 by MITI without any advance notice and further consultation.”

The move, STA said, was clearly in contrary to the assurance put forward by the government to the industries through various consultations and the spirit of engagement with stakeholders.

“STA is really saddened by the government’s decision to announce the implementation of the new levies rates only a day before its effective date despite stakeholders’ consistent call to the government for proper consultation before any changes to the policy and its implementation are made which are definitely going to have grave impact on the businesses.”

With the current challenging economic conditions and rising cost of doing business caused by the minimum wage, higher energy costs, higher costs of raw materials inputs and lower sales revenue, not to mention the revised higher minimum wage due for implementation on July 1, 2016, STA said many businesses would suffer even more severely with this extra hike in levies.

“As our industry is highly dependent on the export markets, this sudden increase in the cost of doing business would certainly lead to increase in the prices of our timber products and thus render our products being less competitive compared to similar products from our competitors such as Indonesia and Vietnam.”

STA is of the view that the increases of levies for foreign workers are untimely and not suitable for implementation.

“It may result in closures of mills and retrenchment may become unavoidable in Sarawak which in turn is not beneficial to the state’s economy.”

STA strongly believes that a holistic reform to the policy, inclusive of export-import policies should first be put in place to ensure that the employers’ ability to pay levies is sustainable in the long run.

“Hence, there is a need to fix the levies rate at a reasonable rate. In addition, to ensure that employers in the timber industry could sustain their businesses, employers ought to be given ample time to adjust accordingly to the new levies rate implementation.”