KUCHING: The Malaysian Iron and Steel Industry Federation (MISIF) has called on the government to review and rescind the recent decision to shift responsibility of paying the foreign worker levy to employers.
This comes after the decision last week by Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, who said that effective January 1 under the the Employer Mandatory Commitment (EMC), employers are fully responsible for their workers from the time of appointment to the time they return to their countries.
In a statement, MISIF president Datuk Soh Thian Lai, questioned the clear lack of dialogue or due consultation with businesses which would have immediate cost and operational impacts on manufacturers, including iron and steel manufacturers.
“While we appreciate the government’s objective to reduce the number of cases of workers fleeing, working illegally in other sectors, and over staying, the EMC will not be the solution as these monumental tasks require shared responsibility and collective effort of all stakeholders and certainly not the employers alone,” Soh said in the statement.
“We have heavy reliance on foreign labour as there are still numerous unresolved issues related foreign labour including the unwillingness of locals taking local position, their inability to stay long in a position and the high costs of upgrading current manufacturing processes.
“The alternative adoption of labour-saving processes through the introduction of mechanisation and automation systems is difficult and not feasible at this point of time due to uncertain market conditions and the weak Ringgit,” he shared.
With a reported excess of RM5 billion threatened to be drained from the Malaysian economy each year if employers are required to pay the levy for hiring foreign workers, the establishment of the EMC would also contribute to an overall increase in operating costs for many businesses, posing additional financial pressure on employers as well as the overall competitiveness of industry players.
In particular, the Malaysian iron and steel industry has been going through a very challenging business environment over the last couple of years supported by a multitude of factors that have contributed in the escalation of higher business costs such as: the worrisome China Factor, the implementation of Goods and Services Tax (GST), the depreciation of Ringgit, the withdrawal of subsidies in utilities, and the global economic downturn.
In view of this, Soh argued that passing on incremental cost to the consumers would create an inflationary pressure on the consumer or further reduce the volume of business.
“It would be dreadful that instead of priding ourselves as a high income nation, we would emerge in reality as a very high cost producer nation with all its adverse effect on the economy.
“Companies have been preparing to face the challenges of the New Year but it is unwelcome surprises like this EMC and the natural gas price increase over the next three years announced by the Government last week, which will erode the competitiveness and present a real setback to the industry.”
“We hope that the Government will rescind the hasty implementation of the policy requiring employers to pay for foreign workers’ levy and that it will conduct a stakeholders’ consultation process on this very significant matter,” he urged.