Jan 9, 2017

Consumers could bear cost for shift in foreign workers levy, say builders

Consumers could bear cost for shift in foreign workers levy, say builders
AFP photo

KUALA LUMPUR: Consumers may end up bearing the extra cost borne by contractors in paying their foreign workers levy.

Effective Jan 1 this year, employers must pay the levy for their foreign workers and can no longer deduct the latter’s salaries to pay for it.

The move comes under the Employer Mandatory Commitment (EMC), which aims to ensure that employers take full responsibility for their foreign workers, from the time of their appointment until they return to their countries.

Master Builders Association Malaysia (MBAM) has estimated that local contractors will pay some RM2 billion towards the levy, and have not ruled out passing on some of the cost to the end-buyers.

Speaking to reporters today, MBAM president Foo Chek Lee said the move to switch the levy payment from foreign workers to the employers will place a great financial burden on the industry.

The association, which represents 32 other contractors associations with 13,000 members nationwide, called on the government to rescind the new levy.

Foo said there are about 900,000 foreign workers in the construction sector alone, with a levy of RM1,850 per head plus administrative costs.

“With that we expect an impact of about RM2 billion per annum for the contractors.

For the whole industry, the impact would be more,” adding that adding that the additional cost may, ultimately, be passed down to the end-buyers. “Such a huge sum of money will further impair the cash flow of the employers and make construction more expensive and less competitive,” he added.

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