Did Putrajaya bulldoze rule on workers’ levy?

Economists differ on what Putrajaya should do amid claims it did not carry out enough consultations on the new policy.

PETALING JAYA: A think tank has urged the government to respond to allegations that it did not have enough consultations with industry before coming up with a ruling that requires employers to pay the levy on foreign workers.

Speaking to FMT, Socio-Economic Research Centre executive director Lee Heng Guie said such allegations could affect investor confidence.

He said investors would want to see that Putrajaya was being transparent and consistent in its policy decisions.

Lee was commenting on news reports about business associations complaining that the government had failed to hold adequate consultations over the new policy.

He said investors would want to be aware of major policy changes, especially those that could affect the cost of doing business.

“Although the issue of having employers pay for the levies has been talked about for some time, businesses must still be given time to adjust,” he said.

“If it is true that stakeholders were not consulted or not consulted enough, then businesses with a large foreign workforce would be affected, more so when many businesses are struggling in the current economic climate and amidst the weakening of the ringgit.”

Economist Firdaos Rosli disagreed with Lee, saying he did not believe that investor confidence would be affected by the alleged lack of consultation.

He said the government move was not surprising, noting that talk about it had been going on for some time.

“The bigger question is whether consultation will actually make a difference,” he said. “Will it result in a change in the government stance? And why are we dismissing the point that there will be positive spillover to domestic workers as well?”

Firdaos, a fellow at the Institute of Strategic and International Studies Malaysia, said foreign investors would be more concerned with the consistency of a government stand.

“We can argue about the timing and rate of increase of the levy, but I think the government’ stance in this matter is pretty clear and consistent. That is more important to foreign investors than just holding talks with relevant stakeholders.”

Malaysian Employers Federation executive director Shamsuddin Bardan told FMT the government should have given employers one year’s notice to allow them to make the necessary adjustments.

“Employers have not budgeted for this new policy,” he said. “For many companies, the budgeting process finishes in November. This new policy disrupts a company’s budget and planning.”

An earlier news report quoted Master Builders Association president Foo Chek Lee as saying that members of the association had not anticipated the new policy. Malaysian Iron and Steel Industry Federation president Soh Thian Lai gave a similar statement.

Last Dec 31, deputy prime minister Ahmad Zahid Hamidi said employers would be responsible for paying the levy on their foreign workers from Jan 1 and would not be allowed to deduct the amount from the workers’ wages. -FMT