Fifty-five local chambers of industry and trade organisations today expressed strong objections to the sudden increase in foreign workers levy rate announced by the government without any prior consultation.

These business groups are also dissatisfied with the government's move to make the foreign workers levy a part of government revenue.

"We have on numerous occasions taken the view that the levy is not part of government revenue and that it should in fact be ploughed back to the respective industry for the purpose of training and upgrading foreign workers," deputy secretary-general of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Teo Chiang Kok said in Kuala Lumpur today.

These business groups suggest that the government legalise illegal foreign workers to increase their revenue.

By legalising the four million illegal foreign workers, it will help the government get extra income of RM5 billion, said Teo.

Starting from this month, manufacturers and construction companies will have to fork out RM2,500 per worker, up from RM1,250.

Deputy Prime Minister Ahmad Zahid Hamidi, who announced the higher levy yesterday, said the revised levy would bring in some RM2.5 billion in additional revenue.

No real financial advantage

Teo said the basic purpose of imposing a levy on foreign workers was to balance the costs of hiring local and foreign workers so that employers would not just engage foreign labour.

He added that the higher levy, therefore, would not bring a real financial advantage nor add to government revenue.

"Hence, we are very disturbed with the the reason the government gave (that the levy could bring in RM2.5 billion in revenue).

"We urged the government to immediately withdraw this sudden hike in foreign workers levy," said Teo.

Given the economic reality, he said the country needed foreign workers to complement local ones because the population was not big enough to keep up with rapid economic growth.

However, he said there were now about three to six million illegal workers in the country.

Hence, he said the government should legalise them so that they could contribute to the country's economy without fear, while the government could increase its revenue.

"We understand that we have a budget deficit and it needs to be revised to raise revenue. We suggest that instead of increasing the levy, which is unproductive, we should legalise the illegal workers.

"By doing so, the amount of revenue that can be raised is RM5 billion based on the the original levy of RM1,250 per person. This is more than RM2.5 billion.”

Burden on business

Teo also pointed out that the currrent application process to recruit foreign workers is very complicated and expensive.

Hence, he urged the government to make the application simpler and more cost-effective so that employers would not be driven to hire illegal foreign workers.

"No employer would want to break the law by engaging illegal workers. We have tried many times to legalise illegal foreign workers but were not successful.

"Therefore, the process must be transparent, simpler and not too expensive,” said Teo.

He also urged the Human Resources Ministry to work with business groups instead of making decisions without consultation.

Asked on the impact on business cost (with the higher levy), Teo said the cost would increase to about two to three percent.

Meanwhile, Malayan Agricultural Producers Association director Mohamad Audong said the plantation industry would have to bear the cost of paying the higher levy for the six million foreign workers every year.

Hence, he said the levy hike would definitely be a burden on their business.