THE NEW FOREIGN WORKERS’ LEVY — WHY THE HURRY?

05/02/2016

Tan Sri Ramon Navaratnam
Chairman Asli CPPS Center of Public Policy Studies

THE NEW  FOREIGN WORKERS ` LEVY — WHY THE HURRY ?

Rarely  have  so many  powerful Business  organsations and high powered  business leaders  united so quickly ,to protest  against  the new foreign worlkers` levy that was surprisingly  introduced on Monday !

This  serious situation raises  the  basic question – why was this new Levy introduced in a hurry ? Why were the  busimness community apparently  caught unawares of this  huge  and untimely  levy hike ?

We have a rich traditon in our country  of  Government  and Private sector   Consultations , on even the details  of  major economic  policy changes  , except  of  course  Budget tax proposals . The  surprised  and stern reaction from the business  leaders  show that  there was  inadequate consultations on the rate and timing of the hefty  rise in the foreign  workers` levies .

There  also appears  to be  some lack of  coordiation among  all the relevant   Government agencies ? Otherwise  the Minsistry  of Trade  and  other  economic   branches  of  Government ,  would  have   influenced  the Home Ministry  to be  more  cautious  about the  pricing and timing of  these new  foreigh worker levies

The Businessmen have  valid  reasons to protest , on the following  grounds –

1. The  new  hikes in the new  Levies  are too high , ranging from  100% to 300 % , For example  the Construction  workers levy will       rise    from   Rm 1250/ to Rm 2500/ !
2. At this  time  of  global and the Malaysian economic  slowdown and  falling  oil  prices and the Ringgit , the   high rise  in levies could   raise  business and consumer costs and   reduce  our  competitionas well .
3.   The sudden  increase  in worker  levies  could  cause  major  disruption  and a further  slow  down in production and exports  .

Recommendations -

In view of the above  , I have the following Recommendations for consideration please -

1. It  is ill advised for the   Business community  to ask for  the  Abolishment of  this  new  levy ! Instead it would  be  more  reasonable and practical for Busines  to ask the Government , for  a “calibrated phase – in“ of this new  levy ,The new levy  could also be  much lower  initially and could be raised  later  , when  the economy and the businesses are  more  ready to adjust .

2. The Government  can avoid Flip Flops by   keeping the new policy  , but   Lowering the  Levy  increases  to make the levies more acceptable to the  business sector and also consumers .

3. In the meantime  , please treat  and  consult  the  private sector as  equal partners in  development  and  do not  spring  surprises on  them or  catch them off guard !

4. The  rise in foreign worker  levies  has  much benefit  ,  which should  be  highlighted to the public  . The  public  need  to be  better   informed  on  the overall  costs and benefits  on  raising the  worker levies   , in  the wider public  and longer term interests .

5. The  additional Rm 2.5 billion  tha the Government  hopes  to  gain from this  new  levy  is  atrractive  – but it need   not  be over zealous  in its collection , as  it  might also reflect  Governement`s  desperation to protect the  Budget integrity !

6. There needs to be  greater   integration  between  this  new policy on foreign    worker  levies and the new  Minimum Wage policy  which will  come  out   this  June ! I hope thre are no more  sudden surprises  on rates  and timing !

7. There is  plenty  of  speculation that these  new levies   could  benefit Monopolies . If  there  is  any  truth in this  , the Government  must be  bold  to clear the air  and increas competition ,   to benefit the vast  majority  of consumers rather  than protect a few cronies , please ?

8. It  is  encouraging that the Government is  finally  trying hard to reduce the  unnessarily  huge influx and use  of imported  labour , — estemated at about 2.2  million legal and about 6 million illegal foreign workers   . But it  should  have  wider and deeper  consultations with all the relevant  stakeholders  , with more care and considration,  for the pulic good  at large

Finally , it is agreed  that we need to better  manage  the  vast problems of  the unweildly  and contiuing inflow of  foreign workers.  But  good  policies  must  be backed up by more open and proper practices  , for our country and people to prosper and succeed , please

Tan Sri Ramon Navaratnam
Chairman Asli Center for Public Policy Studies

February  4th , 2016

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