Sunday, May 26

Any logic behind the hike on levy rate?


I refer to the government’s decision to hike levy rate for foreign workers recently.

If a foreign worker is hired, there must be a levy built into the cost of hiring this person, and this is before the worker has added any value to the work of the company. It doesn’t make sense, does it?

If the cost of foreign workers increases, someone has to pay for it. Consumers may pay in the form of higher prices from increased cost.

The ministry said the increased levy will encourage companies to invest in technology and reduce dependency on low skilled foreign workers, so why did Home Minister Datuk Dr Ahmad Zahid Hamidi announce the plan to bring in 1.5 million Bangladesh workers in stages over three years? Isn’t that ironic?

I believe at the end of the day, it’s all about the revenue.

Can you imagine how much extra revenue to the government with the implementation of the new levy rate? RM2.5 billion.

According to Deputy Home Minister Nur Jazlan, the levy was not meant to be a method of raising revenue for the government.

If this is not meant to raise revenue for the government, why does he want to collect the levy in the first place?

Even if he claimed the levy is a fair exchange, it will benefit them while living here, from healthcare to subsidised essential goods. Doesn’t he think the issue of foreign workers benefiting from subsidised goods and services is actually the result of the
subsidy policy which can’t exclude non-Malaysians from benefiting?

He argues that the continued dependence on foreign workers would be detrimental to local workers.

Wouldn’t it be great if they can meet the demands of employers from various sectors, especially those involved in dirty, dangerous and difficult work so we can be ‘freed’ for employment in other sectors.

Why can’t he ask how many jobs are created because of foreign workers, for example?

Of course, their presence will increase the supply of labour which tends to put downward pressure on wages.

But if a foreign worker is willing to work for a low wage and he is productive enough, it only makes sense to choose the lower cost labour. We all make the same decisions on a daily basis when we shop for goods and services.

Institute for Leadership and Development Studies (LEAD)