FSI: Levy hike on foreign workers bad move

Kota Kinabalu: The Federation of Sabah Industries (FSI) urged the Government to halt the levy hike on foreign workers, describing the move as abrupt, unreasonable and unilaterally made as there was no prior notice or consultation with the industries and stakeholders.The federation said its members are mostly manufacturers employing between five and up to 100 foreign workers and cannot afford to foot any further increase in levy, what more a whopping 147.5 per cent amid the current economic slowdown.

It said in a statement that local businesses in the State are already coping with high cost in doing business.

It questioned whether the move reflects desperation on the part of the Government for funds even at the expense of the industries.

It urged the Government to be more business-friendly, instead, and intervene as well as play its role to facilitate business and not cause further trouble to the struggling industries in Sabah.

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The FSI said if the levy is implemented, it will backfire on the Government as manufacturers and other industries will reduce its manpower and production or pass on higher costs of production to consumers. The move will potentially drive employers to hire illegal or undocumented foreign workers which will deny the Government income from levy.

Echoing calls from national trade associations, FSI wants the Government to legalise illegal or undocumented foreign nationals in the state so they can be economically useful for various sectors that are highly dependent on foreign workers such as in manufacturing, construction, plantation and agriculture. It said that these sectors employ 926,400 people or 57 per cent of total employment in the state.

FSI further noted that Sabah has a low unemployment rate of 4.7 per cent or 79,000 which is barely enough to fill the 141,000 job vacancies, according to 2014 figures. It said employers in the state still prefer locals but have resorted to alternative source of labour which is more expensive and the process involved is bureaucratic.

"On top of that, employers have to bear the levies instead of passing on to foreign labours, therefore increasing their labour costs."

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FSI added that employers in the state would choose to hire legally if hiring foreign workers are made more efficient and hiring costs more reasonable and affordable. It called for a win-win deal between the government and industries where the former can generate levy income from legalising illegal foreign workers and the latter can keep hiring costs low.

It said that to increase the Government's coffer by RM2.5 billion through levy income is punitive when businesses are grappling with GST, ringgit devaluation and minimum wage policy. The federation added that this will have a dire impact on Sabah.

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