New foreign worker levy to cost construction sector an additional RM2 billion

The construction sector may have to bear an additional cost of above RM2 billion, annually, following the new ruling that employers will now be responsible to pay the levy of their foreign workers, effective Jan 1, 2017.

Master Builders Association Malaysia (MBAM) President Foo Chek Lee said the impact included the increase in levy to RM1,850 per foreign worker hired from RM1,200 less than a year ago.

On Dec 31, 2016, Deputy Prime Minister, Datuk Seri Dr Ahmad Zahid Hamidi, announced that employers in the manufacturing, construction and services sectors would be responsible for paying the levy of their foreign workers and can no longer deduct their salaries.

Speaking at a press conference here today, Foo said the decision, enforced under Malaysian Employers Federation, was to ensure employers were fully responsible for their workers from the time of their appointment to the time they returned to their countries.

"With the implementation of this policy, this will mean added cost for other supporting industries which may result in further increase in overall cost for the construction industry.

"Such huge sum of monies will further impair the cash flow of employers and make our construction more expensive and less competitive," he said, adding that the additional cost may, ultimately, be passed down to the end-buyers.

He said that MBAM, representing 32 other contractor associations, would to appeal to the government to rescind the new policy and engage the construction industry on the matter for a productive and beneficial outcome for both government and industry players.

"The switch in levy payment will not bring any benefit to our rakyat. The foreign workers will repatriate this additional windfall to their source country.

"We strongly believe this amount (RM2 billion) can be utilised by our local industry to adopt new technologies and mechanisation to improve and increase productivity and thus reduce dependency on foreign labors in the long-run," he said.

By switching the levy, Lee said existing foreign workers serving pre-existing contracts would also demand the same terms causing turmoil in the industry.

"The present legal foreign workers have been contracted with the condition that the foreign workers pay the levy for their right to work in our country.

"Changing this policy midway will not only benefit the foreign workers but will also severely impact the morale and cause dissatisfaction among local workers," he added. -- Bernama