Malaysia’s foreign worker levy will increase 100% from RM1,250 to RM2,500 in the manufacturing and construction sectors; 154% from RM590 to RM1,500 in the plantation sector; and 266% from RM410 to RM1,500 in the agriculture sector.
The announcement, made by the government on 31 January, is contrary to earlier proposals to increase the levies progressively—from RM1,250 to RM1,750 in 2015 and an additional increase of 40% in 2017 to RM2,450; RM3,430 in 2019; and RM5,000 in 2020—so as not to disrupt Malaysia’s growth momentum.
The Sarawak Timber Association has called these increments ‘unreasonable’, ‘untimely’ and ‘too sudden and hasty’ as there was neither industry consultation nor advance notice for employers to prepare for the new adjustment.
It has also put pressure on many businesses in addition to the weak business sentiment, higher energy and raw material costs, as well as the revised higher minimum wage due July 1 this year.
“As our industry is highly dependent on the export markets, this sudden increase in the cost of doing business would certainly lead to increase in the prices of our timber products and thus render our products being less competitive. It may result in closures of mills and retrenchment may become unavoidable in Sarawak which in turn is not beneficial to the State’s economy,” the STA said in a press release.
“This is clearly contrary to the government’s assurance put forward earlier through various consultations and engagement with stakeholders.”