Sabahans urge Putrajaya to drop levy hike on labour
The government hiking the levy on foreign workers to increase its revenue is not the right approach as it would affect so many other areas in the economy and turn out to be counter-productive.
KOTA KINABALU: Many organizations in Sabah are coming forward, in the wake of a statement by the Federation of Sabah Industries (FSI), to urge the Federal Government to drop its levy hike on foreign workers imposed from February 1. The employers are already grappling with the crude oil price decline and commodities downturn, which have led to an economic slowdown.
The construction and plantation sectors have taken to the local media to complain that the hike in levy for employing foreign labour was untimely given the deteriorating economic conditions in Sabah as elsewhere in the country. “By doubling the current levy from RM1,250 to RM2,500 per worker per annum, to be paid by employers, the Federal Government is increasing its revenue by billions at the expense of industries and ultimately the people,” said Sabah Builders Association (SBA) President Cheong Kwee Min. “After the 6 per cent GST, the government is now expecting industries to fork out another RM2.5 billion.”
He warned that the employers cannot afford to absorb the levy hike and the burden would have to be passed on to consumers.
Cheong’s comments were echoed by the Sabah Housing and Real Estate Developers Association (Shareda) President Francis Goh who pointed out that the economy has been slowing down with no signs that a turnaround was in sight any time soon. Goh, also the MCA Sabah Deputy President, said the government hiking the levy on foreign workers to increase its revenue was not the right approach as it would affect so many other areas in the economy and turn out to be counter-productive. “If employers insist on deducting the levy from the wages of their foreign workers, they may no longer want to come to Malaysia,” he said. “That’s the reality although the employers are supposed to pay the levy and not deduct them from the wages of their foreign workers.”
“This means that employers would ultimately be forced to increase the wages for foreign workers in order to encourage them to come to Malaysia.”
Goh, however, rules out employers passing on the levy hike to consumers. “Businesses cannot simply do so. They would have to absorb the levy hike and this means their costs and revenue would be affected.”
“If employers pass on the costs to consumers, they would simply choose not to buy, especially in the present economic climate. We cannot afford that.”
East Malaysian Planters Association Chairman Masri Pudin said although the hike in the levy on foreign labour in the sector was lower, i.e. from RM590 to RM1,500 per annum, it was still demoralizing. “We are still coping with the effects of the El Nino phenomenon which led to a drastic drop in output, and meanwhile we have been hit by an increase in the minimum wage from RM800 per month to RM920 per month.”
“The sustainability of the palm oil industry in Sabah is being severely tested. We are at the brink after facing a depressed market for more than 24 months. The hike in levy on foreign workers will add another RM25 per metric tonne of crude palm oil (CPO).”
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Sabah, according to Masri, has 1.5 million hectares under oil palm, employing 187,500 workers, 85 per cent of them foreigners mainly from Indonesia.