Employers and workers to share extension levy payments

Employers in Malaysia will only have to pay 20 per cent of the RM10,000 annual levy for each foreign worker who opt for extension after working for more than 10 years, according to Finance Minister Lim Guan Eng.

Earlier, Human Resource Minister M. Kulasegaran had announced that foreign workers who had worked the maximum 10 years can renew their temporary employment pass annually for up to an additional three years with an annual levy of RM10,000. This extension is to enable employers to retain skilled foreign workers in selected sectors, including the construction industry.

Following a Cabinet decision in March 2016, foreign worker levies are supposed to be fully borne by employers.

“We have received complaints, and we understand that this (levy) is quite a heavy burden, so we have tweaked it to an 80–20 share, (under) which 20 per cent [is to be borne] by employers and 80 per cent by foreign workers,” said Finance Minister Lim Guan Eng in his keynote speech at the REHDA Institute CEO Series 2018 (Annual Property Developers Conference) on 24 September 2018.

“This leeway would help reduce the need to recruit new inexperienced foreign workers who would require additional on-the-job training that adds to construction cost, he adds.

“In the long run, the government hopes to reduce reliance of foreign workers but no abrupt changes will happen so that market does not suffer a shock.”

Commenting on the issue at the same event, president of Master Builders Association Malaysia Foo Chek Lee said, “The industry still needs foreign workers. The government should look into making the employment of foreign workers easy and cheaper so the cost of business will be reasonable.

Regarding the 80–20 levy payment, he adds, “On the surface it looks nice, but which worker will pay RM8,000 to stay for a year? Because they have to fork out RM600 to RM700 a month, I think they would rather choose to go back.

“This will not fit the purpose of us wanting to increase our efficiency and also to cut the cost of doing business. So, I think government should seriously look into this policy as this is not business-friendly.”

The extension levy is expected to contribute about RM1 billion to the government coffers over three years, according to Lim. — Construction+ Online

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