Reconsider taxing businesses hiring foreign labour, govt told

 

The government should consider providing grants or low-cost loans to encourage businesses to digitalise and automate in a financially sustainable way, said SME Association of Malaysia. (Bernama pic)

PETALING JAYA: A group representing small and medium enterprises has urged the government to reconsider a plan to impose tiered levies on businesses hiring foreign workers.

SME Association of Malaysia president Ding Hong Sing said the tiered levies would burden companies that rely on foreign workers.

He was commenting on Prime Minister Anwar Ibrahim’s proposal to implement tiered foreign worker levies on businesses, with a portion going towards automation and training programmes for local workers.

“It is true the government has to embark on automation and digitisation because if you lack these two then it is difficult to reduce the reliance on foreign workers,” Ding told FMT.

“But levies will also mean increased costs for businesses at a time when our economy and our currency are weak,” he said.

Ding said it would be better for the government to consider providing grants or low-cost loan facilities to allow businesses to digitalise and automate in a financially sustainable way.

“For example, as of 2021, there are 1,226,494 registered micro-SMEs. The government can introduce grants of up to RM15,000 to help around 30,000 companies with digitalisation every year.”

Meanwhile, Malaysian Employers Federation (MEF) president Syed Hussain Syed Husman said the organisation supported the prime minister’s proposal but said such policies need to be implemented gradually to avoid affecting business operations.

“The reduced reliance on foreign workers should happen in stages to allow businesses to adjust, “he told FMT.

Syed Hussain dismissed the suggestion that employers prefer hiring foreign workers because they were cheaper.

“Employing foreign workers comes with other obligations under the zero-cost recruitment policy such as payment of fees charged in source countries, airfares, medical check-ups, levies, accommodation and transportation costs.

“Additionally, the implementation of the RM1,500 minimum wage has increased the cost of doing business by up to 36% at a time when many are still rebuilding their business after the Covid-19 pandemic.”

The Malaysian International Chambers of Commerce and Industry president Christina Tee also backed the government’s move but said it is not a “one-size-fits-all” solution to low wages, foreign labour dependence and automation.

She said, even with automation, the country could not completely do away with foreign labour since many jobs are shunned by locals.

“Until there are robots that can do plumbing, carpentry, make hotel beds or harvest oil palm fruit bunches, we will still need foreign workers,” she said, adding that the adoption rate of automation also depends on its cost to a business. - FMT