1 / 94

ADDRESSING ISSUES FACED BY THE INDUSTRY

ADDRESSING ISSUES FACED BY THE INDUSTRY. Roadshow 2016. Contents. Labour and Foreign Workers Issues Reinvestment Allowance Energy Issues Export Strategies Caring for the Environment. Labour and Foreign Workers.

pnowlin
Download Presentation

ADDRESSING ISSUES FACED BY THE INDUSTRY

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. ADDRESSING ISSUES FACED BY THE INDUSTRY Roadshow 2016

  2. Contents • Labour and Foreign Workers Issues • Reinvestment Allowance • Energy Issues • Export Strategies • Caring for the Environment

  3. Labour and Foreign Workers • MPMA actively participated and contributed to the Trade Associations Joint Meetings on Foreign Workers and Human Resources Issues, led by the Associated Chinese Chamber of Commerce and Industries Malaysia (ACCCIM), Federation of Malaysian Manufacturers (FMM) and the Malaysian Employers Federation (MEF).

  4. Labour and Foreign Workers • Amongst the issues discussed were: 1. Mandatory Online Renewal of Foreign Workers Permit through MyEG • The Immigration Department issued a notice in May 2015 that all manual counters would be closed permanently on 1 July 2015 with the full implementation of Biomedical and eVDR (Visa Dengan Rujukan) under Foreign Workers Centralised Management System (FWCMS).

  5. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • after 1 July 2015, manual counters would only be opened for the following services: • Application to replace foreign workers; • VDR application for security guards; • Extension of VDR approval letter.

  6. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • In view of the urgency of the matter, ACCCIM proposed to submit a joint letter to the Director-General of the Immigration Department to request for an urgent dialogue on counter closure.

  7. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • The joint letter, sent out in mid June 2015 proposed the following: • Trade associations had expressed that the online submissions should be made as a choice besides the Manual Counter Service, as the online submissions are too rigid and cannot cater for all instances and circumstances.

  8. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • Trade Associations were against the proposed closing of the Manual Counter Service. Should the online service be proven efficient and is able to fully cater to the needs of all situations and circumstances, users will automatically migrate and use the online service. Until then, Trade Associations are strongly of the view that the Manual Counter Service must remain open.

  9. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • When the migration to online applications have been successfully proven, then perhaps the closing of the manual counter service can then be contemplated but with a caveat that a Manual HELP DESK be made available to assist applications with special needs/ circumstances which are beyond the capability of the online system to process.

  10. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • All outsourcing including MyEG, ISC, OSC, VLN, etc, are sub-contracted by the Immigration Department and no additional fees should be imposed on the public. Furthermore, outsourcing should only be done to make avail such processes online and to improve the efficiency and convenience of the public. The processes outsourced for ISC, OSC and VLN should only be undertaken if they are to enable and provide online service.

  11. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • The current ISC, OSC and VLN outsourcing be disbanded immediately unless such outsourcing is to enable online submissions and improve the efficiency and are cost effective to both the Immigration Department as well as to the applicants. 

  12. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • The current outsourcing requiring physical presence, travelling to only limited centres do not improve the procedures and cause the applicant much expense and time to travel long distance just to submit their applications and passports, etc. Outsourcing should only be done if the outsourced processes are online and no additional costs are imposed and no additional expenses need to be expended by the applicants.

  13. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • 1 July 2015 - With the full implementation of BioMedical and VDR modules under the FWCMS, the Immigration Department closed all manual counters permanently. The counter service will only be available for "serious cases".

  14. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • 9 September 2015 - It was reported in The Star Newspaper that since the closure of the counter service, employers who faced delays in the MyEG online permit renewal were left in the lurch. Employers facing the delays had written to both MyEG and Ministry of Home Affairs but had not received any response from them.

  15. Meeting at ACCCIM

  16. Labour and Foreign Workers • 100% Increase in Levy on Foreign Worker • 30 January 2016 - the Government announced a 100% increase on foreign worker levy for the manufacturing sector effective February 2016.

  17. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • This was indeed a very detrimental announcement by the government and left all sectors of the country’s businesses in a state of ‘shock’. • 2 February 2016 - In view of the severe repercussions of the drastic levy increase, a total of 55 trade associations, including MPMA, held a Press Conference at the ACCCIM.

  18. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • 2 February 2016 - Immediately after the press conference, the 55 associations submitted a joint memorandum to five relevant Government Ministries requesting for the levy hike to be shelved and replaced by a comprehensive move to legalise the existing illegal FW in Malaysia. (Revenue from rehiring program more than sufficient to meet the recalibrated budget shortfall of RM2.5 billion)

  19. Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG • 2 February 2016 - MyEG without due notice nor reason shut down all its services until further notice. A joint press statement urging MyEG to immediately reopen its services to renew visa of legal FW, was drafted.

  20. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • 5 February 2016 - the Government announced that it will implement a programme effective 15 February to legalise the illegal foreign workers in Malaysia. • 6 February 2016 - the Government announced that the proposed levy hike is put on hold • 16 February 2016 - meeting with YB Dato’ Sri Richard Riot Anak Jaem, Minister of Human Resources. The levy hike issue, rehiring of undocumented FW and 1.5 million FW from Bangladesh were the key issues raised during the meetings

  21. News coverage

  22. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • 16 February 2016 - the Director-General of the Ministry of Home Affairs met with the trade associations to discuss the proposed levy hike. All associations present took the stand that the increase must be deferred. The Ministry, however, informed that it is unlikely that the levy hike would be deferred further. • Trade associations were requested to propose an “acceptable” increase/fee to the Government for consideration on or before 1 March 2106. • 22 Feb 2016 - A joint meeting was organised by MEF.

  23. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • Trade associations unanimously agreed that: • There shouldn’t be any increase in levy • Levy shouldn’t be treated as part of the revenue for the Government. It should be ploughed back to the industry for automation and training purposes. • A proper procedure should be implemented to register and legalise the estimated three over million illegal foreign workers in the country. The legalisation and re-hiring process should be able to generate more than RM2.5 billion for the Government.

  24. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • Only foreign workers without work permit or have their work permit expired are allowed to be registered. Foreign workers who “run-away” from their existing employers are not allowed to be registered. This will prevent the foreign workers from “jumping ship” from one industry to another. Foreign workers with criminal records will be not be employed and must be deported.

  25. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • The re-hiring exercises be conducted in a transparent, fair, equitable, practical and cost effective manner. In this regard, the charges/fees in respect of the rehiring exercise must be lowered to a level that will attract the employees/employers to register and make the exercise a success. • 29 February 2016 - The memorandum was submitted to the Ministry of Home Affairs.

  26. Labour and Foreign Workers2. 100% Increase in Levy on Foreign Worker • 18 March 2016 – The ministry of Home Affairs announced that the levy for the manufacturing sector would be increased by RM600 from RM1,250 to RM1,850 (about 50% increase) for Peninsular Malaysia, with immediate effect.

  27. Press Conference at ACCCIM on 2 February 2016

  28. Labour and Foreign Workers3. Suspension on intake of Foreign Workers • Suspension on intake of Foreign Workers • 12 March 2016 - The Deputy Prime Minister announced that the Cabinet has decided to freeze the intake of all new FWs, let alone the intake to 1.5 million Bangladeshi workers. Employers in industries who required foreign workers would have to legalise existing foreigners in the country who are without work permits or whose permits that have expired already.

  29. Labour and Foreign Workers3. Suspension on intake of Foreign Workers • Suspension on intake of Foreign Workers • The DPM also announced that the Rehiring and Relocation Programme, which started on 15 February will end 30 June instead of 31 December 2016. • 12 April 2016 - A joint meeting was held at ACCCIM and decided that a joint memorandum be submitted to the relevant ministries appealing for lifting of the suspension.

  30. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • High Fee for Registration of Illegal Foreign Workers through MyEG • 4 September 2015 - It was reported that MyEG had been appointed as one of the companies to register illegal foreign workers in the country, targeted to start in mid October 2015. A proposed fee of RM5,800 per FW will be charged. The fee will include handling charges by MyEG and other cost such as insurance, FOMEMA, FWCS, Data Card, Levy, Visa and processing fees.

  31. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • 12 October 2015 - A joint meeting was held in ACCCIM to discuss the above. • November 2015 - A joint memorandum was sent to the Ministry of Home Affairs (KDN), proposing the following: • Registration fee to revert to RM700 as in the 6P instead of RM5,800 as it is too costly for employers to bear.

  32. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • Close the ‘loop-holes’ in the previous 6P. Illegal FWs should exclude the category of FW who are legal but switched employers thus deemed them illegal. They should not be allowed to re-register but should be deported immediately to discourage them from switching employers.

  33. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • The registration of illegal FW to legal should be opened to more companies. The award to only three companies to undertake the registration of illegal FWs to legal created a semi-monopoly environment which is unhealthy. More companies throughout the country should be allowed to tender for the registration which will also make it more convenient for employers through the country to do the registration.

  34. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • Enforcement - When all illegal FWs are subsequently registered as legal, the issue of illegal FWs should not arise. Stringent enforcement is necessary to ensure that all FWs are legal at source. Hence, the procedures for applying for FWs should be transparent, easy to follow with known criteria and guidelines without ambiguities and affordable (RM700 and not RM5,800). The system itself should encourage employers to embrace it and not deter them.

  35. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • 15 February 2016 - the Immigration Department announced that employers need to pay RM1,200 per FW to register illegal foreign workers through online services. The RM1,200 were set by the vendors which include RM800 for registration and RM400 for administrative. The total cost to register an illegal FW will range from RM1,395 to RM3,485 including fines for immigration offences, levy, visa processing fees and work permit.

  36. Labour and Foreign Workers4. High Fee for Registration of Illegal Foreign Workers through MyEG • A joint statement was drafted requesting that MOHR and KDN ensure that these exercises are conducted in a transparent, fair, equitable, practical and cost effective manner. • 22 February 2016 - The joint meeting organised by MEF agreed that, amongst others, the rehiring program must not be cost prohibitive, and the lessons learnt in the 6P exercise not be repeated.

  37. Labour and Foreign Workers5. Employment Insurance Scheme • Employment Insurance Scheme • 15 June 2015 - MPMA participated at the joint meeting in FMM to review the proposed Employment Insurance Scheme (Skim Insurans Pekerja/SIP).

  38. Labour and Foreign Workers5. Employment Insurance Scheme • Trade associations unanimously agreed that the SIP should not be implemented for the following reasons: • The scheme will encourage "bad employers" not to pay compensation to retrenched workers. It is not fair for other employers to subsidise the "bad employers". • Other than the employers and employees, Government should also contribute to the scheme.

  39. Labour and Foreign Workers5. Employment Insurance Scheme • There is already a provision for layoff/ termination benefits under the Employment Act. As such, there is no necessity for the two scheme to co-exist. If the SIP is introduced, the layoff/termination benefit scheme should then be abolished.

  40. Labour and Foreign Workers5. Employment Insurance Scheme • The cost benefits are very little. Both employers and employees will be paying huge amount of funds but benefiting only to a small group of employees. The fact is the unemployment rate is only 3% or 400,000 workers which is technically under a full employment. The 3% unemployment represents mostly the fresh graduates waiting for jobs and the workers that are shifting from one job to another. As such, it is not cost viable to manage a fund which will only benefit a small group of employees, the cost of managing the fund eventually may exceed the total pay-outs to unemployed/retrenched workers.

  41. Labour and Foreign Workers5. Employment Insurance Scheme • The scheme does not cover all categories of workers, those with monthly salary above RM4,000 per month are excluded. • The existing funding schemes like SOCSO and HRDF should be extended to cover similar benefits of the proposed SIP. MPMA fully supported the views (i - vi) tabled above by FMM and agreed for FMM to handle the SIP with the Government.

  42. Labour and Foreign Workers5. Employment Insurance Scheme • Trade Associations agreed that: • Employers should object the SIP. • Should the Government insists on the SIP, MEF would propose an alternative savings scheme. The scheme would involve contributions from the employers, employees and Government. If the participating company does not retrench any employees, the portion of the employer's contribution would be refunded to the company.

  43. Labour and Foreign Workers6. Review of Minimum Wage 6. Review of Minimum Wage • 9 December 2015 - MPMA participated in a high level meeting in MEF, which was held to collate comments and suggestions to be tabled for discussion at the NWCC.

  44. Labour and Foreign Workers6. Review of Minimum Wage • MPMA suggested that: • The implementation of the increase in minimum wage be deferred by 12 months effective 1 July 2017 because: • SMEs have just implemented MW policy (RM900) for foreign workers on January 2014, they are still struggling to adjust to the substantial labour cost increase. • The domestic oriented manufacturers are facing the impact of GST implementation, higher raw material costs due to weakening ringgit, toll increase, etc.

  45. Labour and Foreign Workers6. Review of Minimum Wage • There are several additional costs for employing foreign workers which are cost additional burden to the manufacturers, including the Visa Luar Negeri (VLN) fee, foreign workers passport handling fee imposed by the handling company, Immigration Security Clearance fee and FORMEMA health screening fee.

  46. Labour and Foreign Workers6. Review of Minimum Wage • Allowances which are linked to wage including shift, attendance and Sunday allowances be included into the definition of minimum wages. • Foreign worker’s levy payment to be deducted from the workers monthly wages. • Transport and accommodation allowances should also be included in foreign workers’ minimum wage as per current practice.

  47. Reinvestment Allowance • MPMA has been actively pursuing this issue with the Government since 2008 by requesting the Government to extend the RA claimable period from 15 years to 30 years or longer. • Over the last two years, MPMA frequently requested other trade associations including FMM and ACCCIM to also pursue the same. • However, the Government was not in favour of our proposal because they viewed it as a revenue forgone in terms of company income tax.

  48. Chronology of Events on Reinvestment Allowance

  49. Effects of the RA on Government’s Tax RevenueScenario 1: Assuming 10% company profits and 1.4 times multiplier effect (con’t next slide)

  50. Effects of the RA on Government’s Tax RevenueScenario 1: Assuming 10% company profits and 1.4 times multiplier effect Total effects for 10 years as additional tax advantage to the Government = RM83.00 million - RM7.2 million = RM75.8 million

More Related